Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
GENERAL
The Company is a fully-integrated real estate investment trust ("REIT") which owns, leases, develops, redevelops and manages retail and industrial properties primarily located in the Midatlantic and Northeast regions of the United States. The Company's primary focus is on shopping centers. As of December 31, 1994, the Company owned 56 shopping centers in seven states containing 9.5 million square feet, including .9 million square feet built by tenants on land leased from the Company. The Company's shopping centers accounted for 91% and 93%, respectively, of the Company's rental revenue for the years ended December 31, 1994 and 1993. The occupancy rate of the Company's shopping center properties as of December 31, 1994 was 94% and has been over 90% for the past five years. In addition, the Company owns eight warehouse/industrial properties in New Jersey containing 2.0 million square feet and one office building in New Jersey containing 0.1 million square feet.
The Company's shopping centers generally are located on major regional highways in mature, densely populated areas. The Company believes there is strong demand from large tenants relative to the level of supply for retail space in well located shopping centers in densely populated areas in the Midatlantic and Northeast regions of the United States. This is principally a result of the shortage of land in such areas, as well as restrictive zoning which limits the development of retail properties. The Company believes its properties attract consumers from a regional, rather than a neighborhood, marketplace because of (i) their location on regional highways and (ii) the high percentage of square feet dedicated to large, national stores.
As of December 31, 1994, approximately 80% of the square footage of the Company's shopping centers was leased to large stores (over 20,000 square feet) and over 93% was leased to tenants whose businesses are national or regional in scope. The Company's large tenants include discount department stores, supermarkets, home improvements stores, discount apparel stores, membership warehouse clubs, other "destination retailers" and "category killers." Category killers are large stores which offer a complete selection of a category items (e.g., toys, office supplies, etc.) at low prices, often in a warehouse format. The Company's large store tenants typically offer basic consumer necessities such as food, health and beauty aids, moderately priced clothing, building materials and home improvement supplies, and compete primarily on the basis of price. The Company believes that this tenant mix mitigates the effects on its properties of adverse changes in general economic conditions. Substantially all of the Company's large store leases are long-term leases having fixed base rents with step-ups in rent typically occurring every five years.
In addition, the Company's leases generally provide for additional rents based on a percentage of tenants' sales. Of the Company's $70,755,000 of rental revenue in 1994, base rents accounted for approximately 98.7% and percentage rents accounted for approximately 1.3%. The Company's leases generally pass through to tenants the tenant's share of all common area charges (including roof and structure, unless it is the tenant's direct responsibility), real estate taxes and insurance costs and certain capital expenditures. As of December 31, 1994, the average base rent per square foot for the Company's shopping centers was $8.05.
From 1990 through 1994, the Company's property rental revenue for shopping centers (including the effects of straight-lining of rents) was $52,000,000, $54,700,000, $56,900,000, $61,900,000 and $64,700,000, respectively. Straight-lining of rents averages the rent increases provided for in leases such that rental revenue for financial statement purposes is constant throughout the term of the lease. This convention applies to leases entered into after November 14, 1985.
As of December 31, 1994, no single shopping center property accounted for more than 3.1% of the Company's total leasable area for its shopping center properties or more than 5.7% of annualized rental revenue for its shopping center properties. Bradlees, Inc. accounted for 19% of property rentals for the year ended December 31, 1994 and 18% for the years ended December 31, 1993 and 1992.
ITEM 1. BUSINESS - continued
Vornado, Inc., the immediate predecessor to the Company, was merged with the Company on May 6, 1993 in connection with the Company's conversion to a REIT.
The Company administers all operating functions, including leasing, management, construction, finance, legal, accounting and data processing, from its executive offices (other than the leasing of the Company's three Texas properties, which is done by an employee locally).
The Company's principal executive offices are located at Park 80 West, Plaza II, Saddle Brook, New Jersey 07663; telephone (201) 587-1000.
RELATIONSHIP WITH ALEXANDER'S
On March 2, 1995, following bankruptcy court approval of the loan and management arrangements described below, the Company purchased all of the 1,353,468 shares of common stock of Alexander's, Inc. ("Alexander's") owned by Citibank, N.A. ("Citibank") for $40.50 per share in cash (the "Acquisition"), representing 27.1% of the outstanding common stock of Alexander's. After the Acquisition, the Company owns 29.3% of the outstanding shares of common stock of Alexander's. Interstate Properties, which owns 31% of the common shares of beneficial interest of the Company, currently owns 27.1% of the outstanding shares of Alexander's common stock. Alexander's common stock is listed on the New York Stock Exchange under the symbol "ALX". Alexander's will elect to qualify as a REIT in 1995.
Alexander's owns eight properties (where its former department stores were located) consisting of (i) 39.3 acres at the intersection of Routes 4 and 17 in Paramus, New Jersey to be redeveloped into a shopping center, (ii) a 359,000 square foot building (currently being rehabed) leased to Sears, Caldor and Marshalls on Queens Boulevard and 63rd Road in Rego Park, Queens, New York together with one and one-half square blocks of vacant adjacent land, (iii) a general partnership interest and a 92% limited partnership interest in the square block, including a 418,000 square foot building, between Lexington Avenue and Third Avenue and 58th and 59th Street in Manhattan, New York, to be developed, (iv) 50% of the 427,000 square feet of mall stores at the Kings Plaza regional shopping center on Flatbush Avenue in Brooklyn, New York, (v) a 320,000 square foot anchor store which is one of the two anchor stores at the Kings Plaza regional shopping center, which is to be redeveloped, (vi) a 303,000 square foot building leased to Caldor on Fordham Road in the Bronx, New York, (vii) 177,000 square foot building subleased to Caldor at Roosevelt Avenue and Main Street in Flushing, New York and (viii) 173,000 square foot building leased to Conways located at Third Avenue and 157th Street in the Bronx, New York.
The Company and Alexander's have entered into a three year management and development agreement (the "Management Agreement") under which the Company has agreed to manage all Alexander's business affairs and manage and develop Alexander's properties for an annual fee of $3,000,000; plus 6% of development costs with a minimum guaranteed fee for the development portion of $1,650,000 in the first year and $750,000 in each of the second and third years. Pursuant to the Management Agreement, Mr. Roth, the Company's Chairman and Chief Executive Officer, also became Chief Executive Officer of Alexander's.
The fees pursuant to the Management Agreement discussed above, are in addition to leasing fees the Company receives from Alexander's under a leasing agreement in effect since 1992. The term of the leasing agreement has been extended to be co-terminus with the term of the Management Agreement.
On March 15, 1995, the Company and a bank lent Alexander's $75,000,000 in a secured financing, of which $45,000,000 was funded by the Company and the balance was funded by the bank. The Company's loan, which is subordinate to that of the bank, has a three year term and bears interest at 16.43% per annum for the first two years and at a fixed rate for the third year of 992 basis points over one year treasury bills. In addition, Alexander's paid a loan origination fee of $1,500,000 to the Company.
In connection with the Acquisition, the Company and Interstate are restricted for three years from owning in excess of two-thirds of Alexander's common stock or entering into certain other transactions with Alexander's, without the consent of the independent directors of Alexander's.
ITEM 1. BUSINESS - continued
COMPETITION
The leasing of real estate is highly competitive. The principal means of competition are price, location and the nature and condition of the facility to be leased. The Company directly competes with all lessors and developers of similar space in the areas in which its properties are located.
ENVIRONMENTAL REGULATIONS
See "Note 10 - Contingencies" to the Consolidated Financial Statements at page 30.
EMPLOYEES
The Company employs 64 people.
SEGMENT AND OTHER FINANCIAL DATA
"Note 11 - Business Segments" to the Consolidated Financial Statements at page 30, and the information concerning financial condition contained in the statement "Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition" at page 13, are incorporated herein by reference. Vornado engages in no foreign operations.
ITEM 2.



ITEM 2. PROPERTIES
The Company leases 27,000 square feet in Saddle Brook, New Jersey for use as its executive offices.
The following table sets forth certain information as of December 31, 1994 relating to the properties owned by the Company.
(1) Average annualized base rent per square foot does not include rent for leases which have not commenced as of December 31, 1994 or rent for ground leases (which leases are included in percent leased).
(2) The tenant at these locations has subleased or assigned its space from Montgomery Ward & Co., Inc. which remains liable under the lease for that portion of the rent not exceeding the rent previously payable by Montgomery Ward.
(3) These leases are guaranteed by the Stop & Shop Companies, Inc.
(4) Tenant occupies between 30,000 and 39,000 square feet.
(5) These leases had not commenced as of December 31, 1994 and are not included in the "number of tenants" column.
(6) The tenant has ceased operations at these locations but continues to pay rent.
(7) Square footage excludes Albertson's which owns its land and building.
INSURANCE
The Company carries comprehensive liability, fire, flood, extended coverage and rental loss insurance with respect to its properties with policy specifications and insured limits customarily carried for similar properties. Management of the Company believes that the Company's insurance coverage conforms to industry norms.
ITEM 3.

ITEM 3. 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 effect on the Company's financial condition or results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of the year ended December 31, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the names, ages, principal occupations and positions with Vornado of the executive officers of Vornado and the positions held by such officers during the past five years. All executive officers of Vornado have terms of office which run until the next succeeding meeting of the Board of Trustees of Vornado following the Annual Meeting of Shareholders unless they are removed sooner by the Board.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Vornado's common shares are traded on the New York Stock Exchange.
Quarterly price ranges of the common shares and dividends per share paid for the years ended December 31, 1994 and 1993 were as follows:
* Does not include a special dividend of $3.36 per share of accumulated earnings and profits paid in June 1993.
The approximate number of record holders of common shares of Vornado at December 31, 1994, was 2,000.
ITEM 6.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(1) In 1990, the Company changed to a calendar year end from a fiscal year ending on the last Saturday in January. The amounts for the year ended December 31, 1990 are included for comparative purposes only.
(2) Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. 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.
Amounts included in revenues and expenses have been reclassified to conform with the current year's presentation.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
Funds from operations improved to $49,847,000 in 1994 from $35,214,000 in 1993, an increase of $14,633,000 or 41.5%.
Funds from operations is defined as income from continuing operations before income taxes plus depreciation and amortization (including debt issuance costs) less straight-lining of rents and realized gains on securities available for sale and excluding costs incurred in connection with the merger of Vornado, Inc. into Vornado Realty Trust in 1993. Funds from operations does not represent cash generated from operating activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. 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. Nonetheless, management considers funds from operations an appropriate supplemental measure of the Company's operating performance.
The Company's revenues, which consist of property rentals, tenant expense reimbursements and other income were $93,998,000 in 1994, compared to $88,790,000 in 1993, an increase of $5,208,000 or 5.9%.
Property rentals from shopping centers were $63,778,000 in 1994, compared to $60,919,000 in 1993, an increase of $2,859,000 or 4.7%. This increase resulted from rental step-ups in leases which are not subject to the straight-line method of revenue recognition of $1,700,000 and $1,300,000 of rents from tenants at expansions of shopping centers. Property rentals from new tenants were approximately the same as property rentals lost from vacating tenants. Property rentals from the remainder of the portfolio were $6,090,000 in 1994 as compared to $5,340,000 in 1993, an increase of $750,000 or 14.0%. This increase resulted primarily from property rentals received from new tenants exceeding property rentals lost from vacating tenants. Percentage rent was $887,000 in 1994 as compared to $954,000 in 1993.
Tenant expense reimbursements were $21,784,000 in 1994, compared to $19,839,000 in 1993, an increase of $1,945,000. This increase reflects a corresponding increase in operating expenses passed through to tenants.
Other income was greater in 1993 than in 1994 primarily as a result of reimbursements recognized under the Company's leasing agreement with Alexander's in 1993.
Operating expenses were $30,223,000 in 1994 as compared to $27,994,000 in 1993, an increase of $2,229,000. This increase resulted primarily from an increase in real estate taxes, snow removal costs and other common area maintenance charges.
Depreciation and amortization expense increased in 1994 primarily as a result of the completion of property expansions.
General and administrative expenses were $6,495,000 in 1994 as compared to $5,890,000 in 1993, an increase of $605,000. This increase resulted from higher professional fees and payroll.
Investment income from cash and cash equivalents, and marketable securities, net of amounts due for U.S. Treasury obligations (collectively, "Liquid Investments"), was $8,132,000 in 1994 compared to $11,883,000 in 1993, a decrease of $3,751,000 or 31.6%. The change in investment income resulted primarily from a decrease in interest and dividend income of $4,131,000 as a result of lower average investments due to the use of approximately $100,000,000 to reduce debt in November 1993, partially offset by an increase in net gains on marketable securities.
Interest and debt expense was $14,209,000 in 1994 as compared to $31,155,000 in 1993, a decrease of $16,946,000 or 54.3%. Of this decrease, (i) $14,586,000 resulted from the refinancing of a blanket mortgage loan (see Note 6), and (ii) $1,300,000 resulted from an increase in capitalized interest during construction.
The Company operates in a manner intended to enable it to continue to qualify as a real estate investment trust ("REIT") under Sections 856-860 of the Internal Revenue Code of 1986 as amended (the "Code"). Under those sections, a REIT which distributes at least 95% of its REIT taxable income to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. The Company has distributed to its shareholders an amount greater than its taxable income. Therefore, no provision for Federal income taxes is required. In 1993, as
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
a result of the Company's conversion to a REIT, the deferred tax balance of $6,369,000 at December 31, 1992 was reversed.
RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1993 AND DECEMBER 31, 1992
Funds from operations improved to $35,214,000 in 1993 from $26,337,000 in 1992, an increase of $8,877,000 or 33.7%.
The Company's revenues, which consist of property rentals, tenant expense reimbursements and other income were $88,790,000 in 1993, compared to $81,997,000 in 1992, an increase of $6,793,000 or 8.3%.
Property rentals from shopping centers were $60,919,000 in 1993, compared to $56,185,000 in 1992, an increase of $4,734,000 or 8.4%. This increase resulted from rental step-ups in existing tenant leases which are not subject to the straight-line method of revenue recognition of $2,061,000 and property rentals received from new tenants exceeding property rentals lost from vacating tenants. Property rentals from the remainder of the portfolio were $5,340,000 in 1993 as compared to $6,316,000 in 1992, a decrease of $976,000 or 15.4%. Of this decrease (i) $477,000 resulted from the closing of the outlet department store at the Company's Watchung, New Jersey location on June 1, 1993 as part of a redevelopment plan (see Liquidity and Capital Resources) and (ii) $499,000 resulted from the excess of property rentals lost from vacating tenants over property rentals received from new tenants. Percentage rent was $954,000 in 1993 as compared to $685,000 in 1992.
Tenant expense reimbursements were $19,839,000 in 1993, compared to $17,898,000 in 1992, an increase of $1,941,000. This increase relates to a corresponding increase in operating expenses passed through to tenants and reimbursements from tenants under leases which commenced subsequent to January 1, 1992.
Other income increased as a result of reimbursements of $750,000 recognized in 1993 under the Company's leasing agreement with Alexander's and a full year of management fees received from Interstate Properties in 1993 as compared to a partial year in 1992.
Operating expenses were $27,994,000 in 1993 as compared to $27,587,000 in 1992, an increase of $407,000. This increase resulted primarily from a rise in real estate taxes offset by savings of $500,000 in connection with the closing of the abovementioned outlet department store.
Depreciation and amortization expense for 1993 did not change significantly from 1992.
General and administrative expenses were $5,890,000 in 1993 as compared to $4,612,000 in 1992, an increase of $1,278,000. This increase resulted from increases in (i) payroll of $500,000, of which $300,000 was applicable to employees added in connection with the management of Interstate Properties (see other income above), (ii) professional fees of $408,000 and (iii) general corporate office expenses of $370,000.
In connection with the merger of Vornado, Inc. into Vornado Realty Trust, the Company incurred costs of $856,000.
Investment income from Liquid Investments was $11,883,000 in 1993 compared to $11,334,000 in 1992, an increase of $549,000 or 4.8%. The change in investment income resulted primarily from an increase in interest and dividend income of $3,065,000 offset by a decrease in net gains on the sale of marketable securities of $2,516,000 (including $1,932,000 from the Company's former investment in a limited partnership, which was liquidated at December 31, 1992 at book value for cash). Of the increase in interest and dividend income, $1,912,000 was attributable to interest income earned on the net proceeds from the issuance of 5,211,700 common shares of beneficial interest in May 1993, net of a distribution of accumulated earnings and profits and working capital used to prepay a blanket mortgage loan. The balance of the increase resulted from the mix of other investments.
Interest and debt expense was $31,155,000 in 1993 as compared to $33,910,000 in 1992, a decrease of $2,755,000 or 8.1%. Of this decrease, (i) $1,600,000 resulted from the refinancing of a blanket mortgage loan (see Note 6), and (ii) $282,000 was due to an increase in capitalized interest during construction.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
LIQUIDITY AND CAPITAL RESOURCES
On December 31, 1994, the Company had Liquid Investments of $77,600,000 (excluding unrealized gains on securities available for sale) compared to $100,400,000 at December 31, 1993, a decrease of $22,800,000. The decrease in Liquid Investments resulted primarily from (i) dividends paid to shareholders of $43,200,000 and (ii) capital expenditures of $25,400,000 exceeding net cash provided from operating activities of $46,900,000.
The major items of capital expenditures for 1994 were (i) $11,400,000 for expansions in three shopping centers, (ii) $3,900,000 for the acquisition of a building in Philadelphia, Pennsylvania and (iii) $2,100,000 for the tenant improvements at the Company's retail property at 14th Street in Manhattan, New York. The Company has budgeted approximately $13,500,000 for investment over the next two years of which $10,000,000 is for future expansions and $2,000,000 is for tenant improvements at the Company's retail property in Philadelphia, noted above. In addition, the Company will continue its program of upgrading its shopping centers by refurbishing its parking lots (including resurfacing, new lighting, updated landscaping, islands and curbing) and re-roofing of buildings, the cost of which will be substantially reimbursed by tenants in accordance with existing lease terms.
In July 1992, the Company was retained by Alexander's Inc. to act as a special real estate consultant. The Company is due approximately $12,400,000 for transactions completed to date. Of this amount, the Company was due to receive $500,000 on July 1, 1994 but has not received such payment. The balance of $11.9 million will be payable over a seven year period in an amount not to exceed $2,500,000 in any calendar year until the present value of such installments (calculated at a discount rate of 9% per annum) equals the amount that would have been paid had it been paid on September 21, 1993 or at the time the transactions which gave rise to the commissions occurred, if later. Such receipts are subject to payment of rents by the underlying tenants pursuant to the leases and to the prior satisfaction of all payments to which certain creditors of Alexander's are entitled under the plan of reorganization confirmed by such creditors (see Notes 13-D and 17).
On March 2, 1995, following bankruptcy court approval of the loan and management arrangements described below, the Company purchased all of the 1,353,468 shares of common stock of Alexander's, Inc. ("Alexander's") owned by Citibank, N.A. ("Citibank") for $40.50 per share in cash (the "Acquisition"), representing 27.1% of the outstanding common stock of Alexander's. After the Acquisition, the Company owns 29.3% of the outstanding shares of common stock of Alexander's. Interstate Properties, which owns 31% of the common shares of beneficial interest of the Company, currently owns 27.1% of the outstanding shares of Alexander's common stock.
The Company and Alexander's have entered into a three year management and development agreement (the "Management Agreement") under which the Company has agreed to manage all Alexander's business affairs and manage and develop Alexander's properties for an annual fee of $3,000,000; plus 6% of development costs with a minimum guaranteed fee for the development portion of $1,650,000 in the first year and $750,000 in each of the second and third years.
The fees pursuant to the Management Agreement discussed above, are in addition to leasing fees the Company receives from Alexander's under a leasing agreement in effect since 1992. The term of the leasing agreement has been extended to be co-terminus with the term of the Management Agreement.
On March 15, 1995, the Company and a bank lent Alexander's $75,000,000 in a secured financing, of which $45,000,000 was funded by the Company and the balance was funded by the bank. The Company's loan, which is subordinate to that of the bank, has a three year term and bears interest at 16.43% per annum for the first two years and at a fixed rate for the third year of 992 basis points over one year treasury bills. In addition, Alexander's paid a loan origination fee of $1,500,000 to the Company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
On February 27, 1995, the Company entered into a three year unsecured revolving credit facility with a bank providing for borrowings of up to $75,000,000. Borrowings bear annual interest, at the Company's election, at Libor plus 1.50% or the higher of the federal funds rate plus 1% or prime rate plus .50%. At March 15, 1995, the Company had borrowed $60,000,000 under the agreement.
In May 1994, the Company's shelf registration statement relating to $350,000,000 of securities became effective.
The Company anticipates that cash from continuing operations, working capital, borrowings under its revolving credit facility and/or proceeds from the issuance of securities under the Company's shelf registration statement will be adequate to fund its business operations, capital expenditures, continuing debt service obligations, the payment of dividends and the Alexander's transactions noted above.
ECONOMIC CONDITIONS
Substantially all of the Company's leases contain step-ups in rent. Such rental increases are not designed to, and in many instances do not, approximate the cost of inflation, but do have the effect of mitigating the adverse impact of inflation. In addition, substantially all of the Company's leases contain provisions that require the tenant to reimburse the Company for the tenant's share of common area charges (including roof and structure, unless it is the tenant's direct responsibility) and real estate taxes thus passing through to the tenants the effects of inflation on such expenses.
Inflation did not have a material effect on the Company's results for the periods presented.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Trustees Vornado Realty Trust Saddle Brook, New Jersey
We have audited the accompanying consolidated balance sheets of Vornado Realty Trust and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of income, shareholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1994. Our audits also included the financial statement schedules listed in Item 14. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Vornado Realty Trust and subsidiaries at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for marketable securities effective January 1, 1994 to conform to Statement of Financial Accounting Standards No. 115.
Deloitte & Touche LLP Parsippany, New Jersey March 9, 1995 (March 15, 1995 as to Note 17)
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (CONTINUED)
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
* Not adjusted for applicable stock splits.
** Includes $3,435 in unrealized gains attributable to the Company's investment in the common stock of Alexander's, Inc. (see Note 13-C).
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION
ORGANIZATION: On May 6, 1993, Vornado, Inc. merged into Vornado Realty Trust, a Maryland real estate investment trust. Vornado Realty Trust was formed on March 29, 1993, as a wholly-owned subsidiary of Vornado, Inc., specifically for the purpose of the merger.
On May 21, 1993, the Company completed the sale of 5,211,700 common shares of beneficial interest (including 211,700 shares which closed on June 4, 1993 pursuant to an election of the underwriters to exercise, in part, their over-allotment option) in a public offering at $35 1/2, which net of expenses yielded $172,051,000 to the Company.
On June 3, 1993, in connection with its conversion to a real estate investment trust, the Company distributed to its shareholders a special dividend of $54,022,000 of accumulated earnings and profits as determined for Federal income tax purposes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying consolidated financial statements include the accounts of Vornado Realty Trust and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated.
Effective December 31, 1994, to be consistent with the prevalent real estate industry practice, the Company changed the presentation of its consolidated statements of income to show tenant reimbursements of expenses, previously offset against operating expenses, as part of revenues and to reflect other income (including fee income from related parties) previously offset against operating and general and administrative expenses, as part of revenues. Prior period's amounts have been reclassified to conform with the current year's presentation.
The financial statements for the applicable periods present the Steinwurtzel fleece apparel wholesaling business as a discontinued operation.
REAL ESTATE: Real estate is carried at the lower of cost or net realizable value. Betterments, major renewals and certain costs directly related to the acquisition, improvement and leasing of real estate are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is provided on a straight-line basis over the assets estimated useful lives. Additions to real estate include interest expense capitalized during construction of $1,582,000 and $282,000 for the years ended December 31, 1994 and 1993.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of highly liquid investments purchased with original maturities of three months or less.
MARKETABLE SECURITIES: On January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115 - Accounting for Certain Investments in Debt and Equity Securities (SFAS No. 115) under which securities are carried at market. The Company has classified debt and equity securities which it intends to hold for an indefinite period of time as securities available for sale and equity securities it intends to buy and sell on a short term basis as trading securities. Unrealized gains and losses are included in earnings for trading securities and as a component of shareholder's equity for securities available for sale. Realized gains or losses on the sale of securities are recorded based on average cost.
REVENUE RECOGNITION: Base rents, additional rents based on tenants' sales volume and reimbursement of the tenants' share of certain operating expenses are generally recognized when due from tenants. The straight-line basis is used to recognize base rents under leases entered into after November 14, 1985 which provide for varying rents over the lease terms.
INCOME TAXES: The Company operates in a manner intended to enable it to continue to qualify as a real estate investment trust ("REIT") under Sections 856-860 of the Internal Revenue Code of 1986 as amended (the "Code"). Under those sections, a REIT which distributes at least 95% of its REIT taxable income to its
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. The Company has distributed to shareholders an amount greater than its taxable income. Therefore, no provision for Federal income taxes is required. As a result of the Company's conversion to a REIT in 1993, the deferred tax balance at December 31, 1992 was reversed in 1993.
AMOUNTS PER SHARE: Amounts per share are computed based upon the weighted average number of shares outstanding during the year and the dilutive effect of stock options.
3. MARKETABLE SECURITIES
The aggregate cost and market value of securities held at December 31, 1994 and 1993 were as follows: - --------------------------------------------------------------------------------
Of the U.S. treasury obligations at December 31, 1994, $10,020,000 (market value $10,106,000) matures within one year and $56,307,000 (market value $56,179,000) matures within three years.
U.S. treasury obligations with a fair market value of $35,205,000 and $26,656,000 were held as collateral for amounts due for U.S. treasury obligations at December 31, 1994 and 1993. Amounts due for U.S. treasury obligations bear variable interest rates which averaged 4.36% and 3.19% for the years ended December 31, 1994 and 1993.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of cash and cash equivalents, due from officer, accounts receivable, accounts payable, and accrued expenses are reflected in the balance sheet. The fair value of marketable securities and the investment in Alexander's, Inc. are based on quoted market prices. At December 31, 1994 and 1993, the fair value of marketable securities was $87,206,000 and $103,496,000 compared to carrying value of $87,206,000 and $99,130,000 at their respective dates. The fair value of the investment in Alexander's was $5,980,000 and $6,871,000 compared to carrying values of $5,980,000 and $2,545,000 at December 31, 1994 and 1993, respectively. The fair value of notes and
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
mortgages payable has been estimated by comparing the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term, versus the stated interest rates in the loans. At December 31, 1994 and 1993, the fair value of notes and mortgages payable were estimated to be $205,496,000 and $233,462,000, respectively. The fair value estimates presented herein are based on pertinent information available to management as of December 31, 1994 and 1993. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from the amounts presented herein.
5. INCOME TAXES
The provision for income taxes for the year ended December 31, 1992 was $1,080,000 of which $239,000 was the current federal provision and $841,000 was the deferred provision. The effective tax rate for the year ended December 31, 1992 was 47.7% of which 34.0% represents the statutory tax rate and 13.7% resulted from costs incurred upon exercise of a stock option by an officer not deductible for income tax purposes.
6. NOTES AND MORTGAGES PAYABLE
In November 1993, a private placement of $227,000,000 aggregate principal amount of secured notes due December 1, 2000 was completed by Vornado Finance Corp., a wholly-owned, special-purpose subsidiary of the Company. The 7-year notes bear a fixed rate of interest of 6.36% per annum. The net proceeds from the offering, together with working capital of Vornado Realty Trust, were used to prepay $327,132,000 of debt including $313,539,000 under a blanket mortgage loan which bore interest at a rate of 9.36% per annum and was scheduled to mature in January 1994. As a result of the early extinguishment of debt, a fourth quarter extraordinary charge of $3,202,000, which primarily represented prepayment penalties, was recorded in 1993.
Notes and mortgages are summarized by range of interest rates as follows: - -------------------------------------------------------------------------------
The net book value of property securing the notes and mortgages amounted to $172,622,000 at December 31, 1994. In addition, $7,000,000 (face amount) of U.S. Treasury Obligations have been escrowed as additional collateral for the $227,000,000 of notes and will be released upon completion of a shopping center expansion. As at December 31, 1994, the maturities for the next five years are as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 7. EMPLOYEES' SHARE OPTION PLAN
Various officers and key employees have been granted incentive share options and/or nonqualified options to purchase common shares. Options granted are at prices equal to 100% of the market price of the Company's shares at date of grant, become exercisable up to 27 months after grant, and expire ten years after the date of grant.
The changes in number of shares under option for the three years ended December 31, 1994 were as follows: - -------------------------------------------------------------------------------
* Option prices and number of shares have been adjusted, as applicable, to reflect the impact of a $3.36 special dividend paid in June 1993, in accordance with the terms of the Plan. - -------------------------------------------------------------------------------- Shares available for future grant at December 31, 1994 were 1,327,816. - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
8. RETIREMENT PLAN
The Company's qualified retirement plan covers all full-time employees. The Plan provides annual pension benefits that are equal to 1% of the employee's annual compensation for each year of participation.
The funding policy is in accordance with the minimum funding requirements of ERISA.
Pension expense includes the following components:
The following table sets forth the Plan's funded status and the amount recognized in the Company's balance sheet:
Plan assets are invested in U.S. government obligations and securities backed by U.S. government guaranteed mortgages. - --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
9. LEASES
As lessor:
The Company leases properties to tenants. The lease terms range from less than five years for smaller tenant spaces to as much as thirty years for major tenants. Most of the leases provide for the payment of fixed base rentals payable monthly in advance, and for the payment by the lessee of additional rents based on a percentage of the tenants' sales as well as reimbursements of real estate taxes, insurance and maintenance. As of December 31, 1994, future base rental revenue under noncancellable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, is as follows:
These amounts do not include rentals based on tenants' sales. These percentage rents approximated $887,000, $954,000 and $685,000 for the years ended December 31, 1994, 1993 and 1992.
As lessee:
The Company is a tenant under leases for certain properties. These leases will expire principally during the next twenty years. Future minimum lease payments under operating leases at December 31, 1994, are as follows:
Rent expense was $1,313,000, $1,366,000 and $1,446,000 for the years ended December 31, 1994, 1993 and 1992.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------
10. CONTINGENCIES
In order to comply with environmental laws and with relevant health-based standards, the Company has an active monitoring and maintenance program for asbestos-containing materials ("ACMs") on its properties. While the Company believes that its program to remove friable ACMs has been substantially completed, one location still requires further work. The Company has received an estimate of $500,000 to remove ACMs, which, pursuant to the lease is the lessee's responsibility. The Company does not believe that this expenditure will have a material adverse effect on the Company's financial condition or results of operations.
The Company also has certain other existing and potential environmental liabilities with respect to compliance costs relating to underground storage tanks and cleanup costs relating to tanks and to three Company sites at which preexisting contamination was found.
The Company believes that known and potential environmental liabilities will not have a material adverse effect on the Company's business, assets or results of operation. However, there can be no assurance that the identification of new areas of contamination, change in the known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to the Company.
At December 31, 1994, the Company had outstanding $1,400,000 of real estate related standby letters of credit which were drawn under a $5,000,000 unsecured line of credit with a bank bearing interest at prime.
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 or results of operations.
11. BUSINESS SEGMENTS
The Company operates in one business segment -- real estate. Bradlees, Inc. accounted for 19% of property rentals for the year ended December 31, 1994 and 18% for the years ended December 31, 1993 and 1992. The Company does not engage in any foreign operations.
12. REPURCHASE AGREEMENTS
The Company enters into agreements for the purchase and resale of U.S. government obligations for periods of up to one week. The obligations purchased under these agreements are held in safekeeping in the name of the Company by various money center banks. The Company has the right to demand additional collateral or return of these invested funds at any time the collateral value is less than 102% of the invested funds plus any accrued earnings thereon.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS
Steven Roth, Chairman of the Board and Chief Executive Officer of the Company, is a general partner of Interstate Properties, a 31.0% shareholder of the Company at December 31, 1994.
A) On December 29, 1992, Mr. Roth exercised a stock option granted to him on October 4, 1985, for 1,500,000 shares of the Company's stock, in order to entitle the Company to a $10.8 million cash reduction in income taxes, the value of which would have been substantially, if not totally, eliminated if the option were exercised once the Company became a REIT. In connection with the exercise, the Company lent Mr. Roth $15,245,000 in 1992 ($9,410,000 of the exercise price of $9,450,000 and $5,835,000 for withholding taxes which were immediately payable by him and $7,000,000 in 1993 for additional taxes payable. In addition, the Company granted him registration rights with respect to such shares. The loan bears interest, payable quarterly, at a rate equal to the broker call rate (7.25% at December 31, 1994) but not less than the minimum applicable federal rate provided under the Internal Revenue Code and is due on December 29, 1997.
On February 4, 1993, the Company repurchased 750,000 shares of this stock from Mr. Roth at $27.17 per share, the closing price on February 3, 1993. As of December 31, 1992, the Company recorded an expense of $15,650,000, representing the difference between the repurchase price and the option price. In connection with the repurchase, Mr. Roth repaid $9,122,500 of the loan including $1,500,000 of the amount he borrowed in 1993.
At December 31, 1994, the loan due from Mr. Roth was $13,122,500 ($4,705,000 of which is shown as a reduction in shareholders' equity).
B) In 1993, the Company lent Messrs. Rowan and Macnow, Vice Presidents, $253,000 and $227,000, respectively, representing amounts owed by such persons in connection with their option exercises. The loans (which are reflected as a reduction in shareholders' equity) accrue interest at a rate equal to the broker call rate (7.25% at December 31, 1994) but not less than the minimum applicable federal rate provided under the Internal Revenue Code and are due December 31, 1995.
C) At December 31, 1994 and 1993, the Company owned 113,100 shares of Alexander's, Inc. common stock. The investment is recorded at market value of $5,980,000 at December 31, 1994 and at cost of $2,545,000 at December 31, 1993. The market value was $6,871,000 at December 31, 1993. Additionally, advances and deferred charges in connection with the property development of Alexander's were $1,370,000 and $607,000 at December 31, 1994 and 1993. These amounts above are shown on the accompanying balance sheet as Investment in and advances to Alexander's, Inc. On March 2, 1995, the Company acquired an additional 1,353,468 shares, or 27.1% of the common stock of Alexander's from Citibank, N.A. As a result of the increase in its investment, the Company will change its accounting for its investment in Alexander's to the equity method which will result in a reduction of its investment to cost by reducing the unrealized gain recorded in shareholders' equity at December 31, 1994 by $3,435,000. Interstate owns 1,354,568 shares, or 27.1%, of the common stock of Alexander's and Mr. Roth is a Director and Chief Executive Officer of Alexander's. Interstate, Mr. Roth and the Company have filed as a "group" with the Securities and Exchange Commission in connection with their respective holdings in Alexander's (see Note 17).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS - (continued)
D) In July 1992, the Company was retained by Alexander's, Inc. to act as a special real estate consultant with respect to the leasing or sale of certain assets in connection with Alexander's reorganization proceedings under Chapter 11 of the Bankruptcy Code.
The terms of the leasing agreement provided the Company with exclusive rights to sell and/or lease the assets of Alexander's through September 21, 1994 and thereafter, shall automatically renew on a year-to-year basis, and is terminable by either party at the end of each year on not less than 60 days prior notice (agreement extended through 1997 - see Note 17). The agreement provides for the Company to generally receive a fee of (i) 3% of sales proceeds and (ii) 3% of lease rent for the first ten years of a lease term, 2% of lease rent for the eleventh through the twentieth years of a lease term and 1% of lease rent for the twenty-first through thirtieth year of the lease term.
Subject to the payment of rents by underlying tenants pursuant to leases and to the prior satisfaction of all payments to which certain creditors of Alexander's are entitled under a plan of reorganization (approved by the Bankruptcy Court in September 1993), the Company is due approximately $12.4 million for transactions completed to date. Of this amount, the Company was due to receive $500,000 on July 1, 1994 but has not received such payment. The balance of $11.9 million will be payable over a seven year period in an amount not to exceed $2,500,000 in any calendar year until the present value of such installments (calculated at a discount rate of 9% per annum) equals the amount that would have been paid had it been paid on September 21, 1993 or at the time the transactions which gave rise to the commissions occurred, if later.
The Company will recognize net fee income on leasing ($11.0 million) over the life of the leases as rentals are paid and interest income ($.6 million) when installments are received.
E) See Note 17 for a discussion of the terms of the Management and Development Agreement entered into with Alexander's in March 1995.
F) The Company currently manages and leases the six shopping centers of Interstate Properties pursuant to a Management Agreement for which the Company receives a quarterly fee equal to 4% of base rent and percentage rent and certain other commissions. The Management Agreement has a term of one year and is automatically renewable unless terminated by either of the parties on sixty days' notice at the end of the term. Although the Management Agreement was not negotiated at arms length, the Company believes based upon comparable fees charged by other real estate companies, that its terms are fair to the Company. For the years ended December 31, 1994 and 1993 and the period from July 13, 1992 through December 31, 1992, $894,000, $913,000 and $367,000 of management fees were earned by the Company pursuant to the Management Agreement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
14. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
1) The decrease in income in the quarter ended June 30, 1993 is due primarily to the Company recording an expense of $856,000 in connection with the merger of Vornado, Inc. into Vornado Realty Trust.
2) The totals for the years ended December 31, 1994 and 1993 differ from the sum of the quarters as a result of the weighting of the average number of shares outstanding and the dilutive effect of stock options.
Amounts included in revenues and expenses have been reclassified to conform with the current year's presentation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
15. STOCK SPLIT
On March 8, 1993, the Board of Trustees approved a three-for-two stock split by declaring a dividend of one share of common stock for each two shares issued and outstanding as of the close of business on March 18, 1993. This distribution resulted in a transfer of $214,000 to the common stock account from additional capital. The additional shares and cash payments in lieu of fractional shares were issued March 25, 1993.
16. DIVIDEND DISTRIBUTIONS
Dividends are characterized for Federal income tax purposes as follows:
* For shareholders who received all dividends distributed during 1993.
17. SUBSEQUENT EVENTS
On March 2, 1995, following bankruptcy court approval of the loan and management arrangements described below, the Company purchased all of the 1,353,468 shares of common stock of Alexander's, Inc. ("Alexander's") owned by Citibank, N.A. ("Citibank") for $40.50 per share in cash (the "Acquisition"), representing 27.1% of the outstanding common stock of Alexander's. After the Acquisition, the Company owns 29.3% of the outstanding shares of common stock of Alexander's. Interstate Properties, which owns 31% of the common shares of beneficial interest of the Company, currently owns 27.1% of the outstanding shares of Alexander's common stock.
The Company and Alexander's have entered into a three year management and development agreement (the "Management Agreement") under which the Company has agreed to manage all Alexander's business affairs and manage and develop Alexander's properties for an annual fee of $3,000,000; plus 6% of development costs with a minimum guaranteed fee for the development portion of $1,650,000 in the first year and $750,000 in each of the second and third years. Pursuant to the Management Agreement, Mr. Roth, the Company's Chairman and Chief Executive Officer, also became Chief Executive Officer of Alexander's.
The fees pursuant to the Management Agreement discussed above, are in addition to leasing fees the Company receives from Alexander's under a leasing agreement in effect since 1992. The term of the leasing agreement has been extended to be co-terminus with the term of the Management Agreement.
On March 15, 1995, the Company and a bank lent Alexander's $75,000,000 in a secured financing, of which $45,000,000 was funded by the Company and the balance was funded by the bank. The Company's loan, which is subordinate to that of the bank has a three year term and bears interest at 16.43% per annum for the first two years and at a fixed rate for the third year of 992 basis points over one year treasury bills. In addition, Alexander's paid a loan origination fee of $1,500,000 to the Company.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 17. SUBSEQUENT EVENTS (continued)
In connection with the Acquisition, the Company and Interstate are restricted for three years from owning in excess of two-thirds of Alexander's common stock or entering into certain other transactions with Alexander's, without the consent of the independent directors of Alexander's.
On February 27, 1995, the Company entered into a three year unsecured revolving credit facility with a bank providing for borrowings of up to $75,000,000. Borrowings bear annual interest, at the Company's election, at Libor plus 1.50% or the higher of the federal funds rate plus 1% or prime rate plus .50%.
The facility contains customary loan covenants including, among others, limits on total outstanding indebtedness; maximum loan to value ratios; minimum debt service coverage, funds from operations, and equity requirements and a negative pledge with respect to certain unencumbered assets. At March 15, 1995, the Company had borrowed $60,000,000 under the agreement.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to trustees of the Registrant will be contained in a definitive Proxy Statement involving the election of trustees which the Registrant will file with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934 not later than 120 days after December 31, 1994, and such information is incorporated herein by reference. Information relating to Executive Officers of the Registrant appears at page 10 of this Annual Report on Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation will be contained in the Proxy Statement referred to above in Item 10, "Directors and Executive Officers of the Registrant", and such information is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to security ownership of certain beneficial owners and management will be contained in the Proxy Statement referred to in Item 10, "Directors and Executive Officers of the Registrant", and such information is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions will be contained in the Proxy Statement referred to in Item 10, "Directors and Executive Officers of the Registrant", and such information is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. The consolidated financial statements are set forth in Item 8 of this Annual Report on Form 10-K.
2. Financial Statement Schedules.
The following financial statement schedules should be read in conjunction with the financial statements included in Item 8 of this Annual Report on Form 10-K.
Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto.
3. Exhibits. See the Exhibit Index at page 44 of this Annual Report on Form 10-K. The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
By: /s/JOSEPH MACNOW --------------------------------- Joseph Macnow, Vice President- Chief Financial Officer
Date: March 15, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
VORNADO REALTY TRUST
AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
- --------------------------------------------------------------------------------
VORNADO REALTY TRUST AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1994 (amounts in thousands)
----- CONTINUED -----
VORNADO REALTY TRUST AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1994 (amounts in thousands)
--- CONTINUED ---
VORNADO REALTY TRUST AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1994 (amounts in thousands)
* These encumbrances are cross collateralized under a blanket mortgage in the amount of $227,000,000 at December 31, 1994.
Notes: 1) Initial cost is cost as of January 30, 1982 (the date on which Vornado commenced real estate operations) unless acquired subseqent to that date - see Column H.
2) Aggregate cost is approximately the same for federal income tax purposes.
3) Date of original construction - many properties have had substantial renovation or additional construction - see Column D.
4) Buildings on these properties were demolished in 1993. As a result, the cost of the buildings and improvements, net of accumulated depreciation, were transferred to land. In addition, the cost of the land in Kearny is net of a $1,615,000 insurance recovery.
VORNADO REALTY TRUST AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION (amounts in thousands)
The following is a reconciliation of real estate assets and accumulated depreciation:
EXHIBIT INDEX
- ------------ * Incorporated by reference ** Management contract or compensatory plan
- ------------ * Incorporated by reference ** Management contract or compensatory plan
- ------------ * Incorporated by reference