vno1q201610q.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended:

March 31, 2016

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

For the transition period from:

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 incorporation or organization)		(I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York		10019
(Address of principal executive offices)		(Zip Code)

(212) 894-7000

(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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of March 31, 2016, 188,771,002 of the registrant’s common shares of beneficial interest are outstanding.


PART I.		Financial Information:	Page Number

	Item 1.	Financial Statements:

		Consolidated Balance Sheets (Unaudited) as of
		March 31, 2016 and December 31, 2015	3

		Consolidated Statements of Income (Unaudited) for the
		Three Months Ended March 31, 2016 and 2015	4

		Consolidated Statements of Comprehensive Income (Unaudited)
		for the Three Months Ended March 31, 2016 and 2015	5

		Consolidated Statements of Changes in Equity (Unaudited) for the
		Three Months Ended March 31, 2016 and 2015	6

		Consolidated Statements of Cash Flows (Unaudited) for the
		Three Months Ended March 31, 2016 and 2015	8

		Notes to Consolidated Financial Statements (Unaudited)	10

		Report of Independent Registered Public Accounting Firm	30

	Item 2.	Management's Discussion and Analysis of Financial Condition
		and Results of Operations	31

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58

	Item 4.	Controls and Procedures	58


PART II.		Other Information:

	Item 1.	Legal Proceedings	59

	Item 1A.	Risk Factors	59

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59

	Item 3.	Defaults Upon Senior Securities	59

	Item 4.	Mine Safety Disclosures	59

	Item 5.	Other Information	59

	Item 6.	Exhibits	59

SIGNATURES			60

EXHIBIT INDEX			61

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Amounts in thousands, except share and per share amounts)			March 31, 2016		December 31, 2015
ASSETS
Real estate, at cost:
	Land		$	4,164,796	$	4,164,799
	Buildings and improvements			12,358,371		12,582,671
	Development costs and construction in progress			1,305,849		1,226,637
	Leasehold improvements and equipment			109,536		116,030
		Total		17,938,552		18,090,137
	Less accumulated depreciation and amortization			(3,352,986)		(3,418,267)
Real estate, net				14,585,566		14,671,870
Cash and cash equivalents				1,673,566		1,835,707
Restricted cash				109,147		107,799
Marketable securities				162,091		150,997
Tenant and other receivables, net of allowance for doubtful accounts of $11,200 and $11,908				97,345		98,062
Investments in partially owned entities				1,553,250		1,550,422
Real estate fund investments				566,696		574,761
Receivable arising from the straight-lining of rents, net of allowance of $2,539 and $2,751				973,709		931,245
Deferred leasing costs, net of accumulated amortization of $218,709 and $218,239				485,283		480,421
Identified intangible assets, net of accumulated amortization of $188,094 and $187,360				218,388		227,901
Assets related to discontinued operations				36,514		37,020
Other assets				411,819		477,088
			$	20,873,374	$	21,143,293

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net			$	9,844,242	$	9,513,713
Senior unsecured notes, net				844,514		844,159
Unsecured revolving credit facilities				-		550,000
Unsecured term loan, net				371,076		183,138
Accounts payable and accrued expenses				447,700		443,955
Deferred revenue				325,013		346,119
Deferred compensation plan				116,824		117,475
Liabilities related to discontinued operations				12,902		12,470
Other liabilities				433,863		426,965
	Total liabilities			12,396,134		12,437,994
Commitments and contingencies
Redeemable noncontrolling interests:
	Class A units - 12,414,019 and 12,242,820 units outstanding			1,172,256		1,223,793
	Series D cumulative redeemable preferred units - 177,101 units outstanding			5,428		5,428
		Total redeemable noncontrolling interests		1,177,684		1,229,221
Vornado shareholders' equity:
	Preferred shares of beneficial interest: no par value per share; authorized 110,000,000
		shares; issued and outstanding 52,676,629 shares		1,276,954		1,276,954
	Common shares of beneficial interest: $.04 par value per share; authorized
		250,000,000 shares; issued and outstanding 188,771,002 and 188,576,853 shares		7,529		7,521
	Additional capital			7,187,036		7,132,979
	Earnings less than distributions			(1,999,994)		(1,766,780)
	Accumulated other comprehensive income			53,399		46,921
		Total Vornado shareholders' equity		6,524,924		6,697,595
Noncontrolling interests in consolidated subsidiaries				774,632		778,483
	Total equity			7,299,556		7,476,078
			$	20,873,374	$	21,143,293

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(Amounts in thousands, except per share amounts)		For the Three Months Ended March 31,
		2016		2015
REVENUES:
	Property rentals	$	519,492	$	500,274
	Tenant expense reimbursements		59,575		66,921
	Fee and other income		33,970		39,607
Total revenues			613,037		606,802
EXPENSES:
	Operating		256,349		254,493
	Depreciation and amortization		142,957		124,122
	General and administrative		48,704		58,492
	Impairment loss and acquisition and transaction related costs		165,307		1,981
Total expenses			613,317		439,088
Operating (loss) income			(280)		167,714
Loss from partially owned entities			(4,240)		(2,743)
Income from real estate fund investments			11,284		24,089
Interest and other investment income, net			3,518		10,792
Interest and debt expense			(100,489)		(91,674)
Net gain on disposition of wholly owned and partially owned assets			714		1,860
(Loss) income before income taxes			(89,493)		110,038
Income tax expense			(2,831)		(971)
(Loss) income from continuing operations			(92,324)		109,067
Income from discontinued operations			716		16,179
Net (loss) income			(91,608)		125,246
Less net (income) loss attributable to noncontrolling interests in:
	Consolidated subsidiaries		(9,678)		(15,882)
	Operating Partnership		7,487		(5,287)
Net (loss) income attributable to Vornado			(93,799)		104,077
Preferred share dividends			(20,364)		(19,484)
NET (LOSS) INCOME attributable to common shareholders		$	(114,163)	$	84,593

(LOSS) INCOME PER COMMON SHARE - BASIC:
	(Loss) income from continuing operations, net	$	(0.61)	$	0.37
	Income from discontinued operations, net		-		0.08
	Net (loss) income per common share	$	(0.61)	$	0.45
	Weighted average shares outstanding		188,658		187,999

(LOSS) INCOME PER COMMON SHARE - DILUTED:
	(Loss) income from continuing operations, net	$	(0.61)	$	0.37
	Income from discontinued operations, net		-		0.08
	Net (loss) income per common share	$	(0.61)	$	0.45
	Weighted average shares outstanding		188,658		189,336

DIVIDENDS PER COMMON SHARE		$	0.63	$	0.63


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)


(Amounts in thousands)		For the Three Months Ended March 31,
		2016		2015
Net (loss) income		$	(91,608)	$	125,246
Other comprehensive income (loss):
	Increase (reduction) in unrealized net gain on available-for-sale securities		11,094		(21,332)
	Pro rata share of other comprehensive income of nonconsolidated subsidiaries		6		157
	Reduction in value of interest rate swaps and other		(4,195)		(771)
Comprehensive (loss) income			(84,703)		103,300
Less comprehensive income attributable to noncontrolling interests			(2,618)		(19,881)
Comprehensive (loss) income attributable to Vornado		$	(87,321)	$	83,419


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)


(Amounts in thousands)																	Non-
															Accumulated		controlling
													Earnings		Other		Interests in
			Preferred Shares				Common Shares				Additional		Less Than		Comprehensive		Consolidated		Total
			Shares		Amount		Shares		Amount		Capital		Distributions		Income		Subsidiaries		Equity
Balance, December 31, 2015				52,677	$	1,276,954		188,577	$	7,521	$	7,132,979	$	(1,766,780)	$	46,921	$	778,483	$	7,476,078
Net loss attributable to Vornado				-		-		-		-		-		(93,799)		-		-		(93,799)
Net income attributable to
	noncontrolling interests in
	consolidated subsidiaries			-		-		-		-		-		-		-		9,678		9,678
Dividends on common shares				-		-		-		-		-		(118,867)		-		-		(118,867)
Dividends on preferred shares				-		-		-		-		-		(20,364)		-		-		(20,364)
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		157		6		14,476		-		-		-		14,482
	Under employees' share
		option plan		-		-		26		1		2,165		-		-		-		2,166
	Under dividend reinvestment plan			-		-		4		-		357		-		-		-		357
Distributions:
	Real estate fund investments			-		-		-		-		-		-		-		(13,487)		(13,487)
	Other			-		-		-		-		-		-		-		(152)		(152)
Deferred compensation shares
	and options			-		-		7		1		535		(186)		-		-		350
Increase in unrealized net gain on
	available-for-sale securities			-		-		-		-		-		-		11,094		-		11,094
Pro rata share of other
	comprehensive income of
	nonconsolidated subsidiaries			-		-		-		-		-		-		6		-		6
Reduction in value of interest
	rate swaps			-		-		-		-		-		-		(4,195)		-		(4,195)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		36,524		-		-		-		36,524
Redeemable noncontrolling interests'
	share of above adjustments			-		-		-		-		-		-		(427)		-		(427)
Other				-		-		-		-		-		2		-		110		112
Balance, March 31, 2016				52,677	$	1,276,954		188,771	$	7,529	$	7,187,036	$	(1,999,994)	$	53,399	$	774,632	$	7,299,556



See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)


(Amounts in thousands)																	Non-
															Accumulated		controlling
													Earnings		Other		Interests in
			Preferred Shares				Common Shares				Additional		Less Than		Comprehensive		Consolidated		Total
			Shares		Amount		Shares		Amount		Capital		Distributions		Income		Subsidiaries		Equity
Balance, December 31, 2014				52,679	$	1,277,026		187,887	$	7,493	$	6,873,025	$	(1,505,385)	$	93,267	$	743,956	$	7,489,382
Net income attributable to Vornado				-		-		-		-		-		104,077		-		-		104,077
Net income attributable to
	noncontrolling interests in
	consolidated subsidiaries			-		-		-		-		-		-		-		15,882		15,882
Distribution of Urban Edge
	Properties			-		-		-		-		-		(464,262)		-		(341)		(464,603)
Dividends on common shares				-		-		-		-		-		(118,447)		-		-		(118,447)
Dividends on preferred shares				-		-		-		-		-		(19,484)		-		-		(19,484)
Common shares issued:
	Upon redemption of Class A
		units, at redemption value		-		-		210		8		23,485		-		-		-		23,493
	Under employees' share
		option plan		-		-		165		7		11,672		(2,579)		-		-		9,100
	Under dividend reinvestment plan			-		-		3		-		338		-		-		-		338
Contributions:
	Real estate fund investments			-		-		-		-		-		-		-		51,350		51,350
Distributions:
	Real estate fund investments			-		-		-		-		-		-		-		(52,882)		(52,882)
	Other			-		-		-		-		-		-		-		(125)		(125)
Conversion of Series A preferred
	shares to common shares			-		(12)		1		-		12		-		-		-		-
Deferred compensation shares
	and options			-		-		7		1		1,324		(359)		-		-		966
Reduction in unrealized net gain
	on available-for-sale securities			-		-		-		-		-		-		(21,332)		-		(21,332)
Pro rata share of other
	comprehensive income of
	nonconsolidated subsidiaries			-		-		-		-		-		-		157		-		157
Reduction in value of interest
	rate swap			-		-		-		-		-		-		(776)		-		(776)
Adjustments to carry redeemable
	Class A units at redemption value			-		-		-		-		25,349		-		-		-		25,349
Redeemable noncontrolling interests'
	share of above adjustments			-		-		-		-		-		-		1,288		-		1,288
Other				-		-		-		-		-		-		5		(90)		(85)
Balance, March 31, 2015				52,679	$	1,277,014		188,273	$	7,509	$	6,935,205	$	(2,006,439)	$	72,609	$	757,750	$	7,043,648


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(Amounts in thousands)			For the Three Months Ended March 31,
			2016		2015
Cash Flows from Operating Activities:
Net (loss) income			$	(91,608)	$	125,246
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	Real estate impairment losses			160,700		256
	Depreciation and amortization (including amortization of deferred financing costs)			150,648		131,112
	Straight-lining of rental income			(41,626)		(29,474)
	Distributions of income from partially owned entities			29,860		15,874
	Amortization of below-market leases, net			(17,507)		(12,754)
	Other non-cash adjustments			15,248		15,865
	Return of capital from real estate fund investments			14,676		72,208
	Net realized and unrealized gains on real estate fund investments			(6,611)		(17,639)
	Loss from partially owned entities			4,240		2,405
	Net gain on disposition of wholly owned and partially owned assets			(714)		(1,860)
	Net gains on sale of real estate and other			-		(32,243)
	Changes in operating assets and liabilities:
		Real estate fund investments		-		(95,022)
		Tenant and other receivables, net		800		975
		Prepaid assets		64,851		62,658
		Other assets		(20,113)		(13,093)
		Accounts payable and accrued expenses		12,774		(12,691)
		Other liabilities		1,027		(17,307)
Net cash provided by operating activities				276,645		194,516

Cash Flows from Investing Activities:
	Development costs and construction in progress			(127,283)		(88,052)
	Additions to real estate			(77,243)		(54,466)
	Investments in partially owned entities			(63,188)		(23,912)
	Distributions of capital from partially owned entities			25,524		13,409
	Proceeds from sales of real estate and related investments			2,867		334,725
	Restricted cash			(1,348)		1,282
	Acquisitions of real estate and other			(938)		(49,878)
	Proceeds from sales and repayments of mortgage and mezzanine loans receivable and other			11		16,763
Net cash (used in) provided by investing activities				(241,598)		149,871

See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)

(Amounts in thousands)				For the Three Months Ended March 31,
				2016		2015
Cash Flows from Financing Activities:
	Repayments of borrowings			$	(909,617)	$	(907,431)
	Proceeds from borrowings				887,500		800,000
	Dividends paid on common shares				(118,867)		(118,447)
	Distributions to noncontrolling interests				(21,474)		(60,287)
	Dividends paid on preferred shares				(20,364)		(19,484)
	Debt issuance and other costs				(16,704)		(5,076)
	Proceeds received from exercise of employee share options				2,523		12,018
	Repurchase of shares related to stock compensation agreements and related
		tax withholdings and other			(185)		(2,939)
	Cash included in the spin-off of Urban Edge Properties				-		(225,000)
	Contributions from noncontrolling interests				-		51,350
Net cash used in financing activities					(197,188)		(475,296)
Net decrease in cash and cash equivalents					(162,141)		(130,909)
Cash and cash equivalents at beginning of period					1,835,707		1,198,477
Cash and cash equivalents at end of period				$	1,673,566	$	1,067,568


Supplemental Disclosure of Cash Flow Information:
	Cash payments for interest, excluding capitalized interest of $7,497 and $8,479			$	91,719	$	91,702
	Cash payments for income taxes			$	2,193	$	2,175


Non-Cash Investing and Financing Activities:
	Accrued capital expenditures included in accounts payable and accrued expenses			$	113,755	$	87,232
	Adjustments to carry redeemable Class A units at redemption value				36,524		25,349
	Write-off of fully depreciated assets				(187,419)		(18,790)
	Non-cash distribution of Urban Edge Properties:
			Assets		-		1,722,263
			Liabilities		-		(1,482,660)
			Equity		-		(239,603)
	Transfer of interest in real estate to Pennsylvania Real Estate Investment Trust				-		(145,313)
	Financing assumed in acquisitions				-		62,000
	Like-kind exchange of real estate:
			Acquisitions		-		57,722
			Dispositions		-		(38,822)
	Receipt of security deposits included in restricted cash and other liabilities				-		42,346


See notes to consolidated financial statements (unaudited).

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Vornado is the sole general partner of, and owned approximately 93.6% of the common limited partnership interest in, the Operating Partnership at March 31, 2016. All references to “we,” “us,” “our,” the “Company” and “Vornado” refer to Vornado Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

2. Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Vornado and its consolidated subsidiaries, including the Operating Partnership. All inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the operating results for the full year.

3. Recently Issued Accounting Literature

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an update ("ASU 2014-09") establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

VORNADO REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(UNAUDITED)

3. Recently Issued Accounting Literature - continued

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation. ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting. ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that began after December 15, 2015. The adoption of this update as of January 1, 2016, did not have any impact on our consolidated financial statements.

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs, and (iv) provide a scope exception for certain entities. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The adoption of this update on January 1, 2016 resulted in the identification of additional VIEs, but did not have an impact on our consolidated financial statements other than additional disclosures (see Note 12 - Variable Interest Entities (“VIEs”)).

In January 2016, the FASB issued an update (“ASU 2016-01”) Recognition and Measurement of Financial Assets and Financial Liabilities to ASC Topic 825, Financial Instruments (“ASC 825”). ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2016-01 on our consolidated financial statements.

In February 2016, the FASB issued (“ASU 2016-02”) Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

In March 2016, the FASB issued an update (“ASU 2016-09”) Improvements to Employee Share-Based Payment Accounting to ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial statements.

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4. Real Estate Fund Investments

We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”), which has an eight-year term and a three-year investment period that ended in July 2013. During the investment period, the Fund was our exclusive investment vehicle for all investments that fit within its investment parameters, as defined. The Fund is accounted for under ASC 946, Financial Services – Investment Companies (“ASC 946”) and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.

We are also the general partner and investment manager of Crowne Plaza Times Square Hotel Co-Investment (the “Co-Investment”), which owns a 24.7% interest in the Crowne Plaza Times Square Hotel. The Fund owns the remaining 75.3% interest. The Co-Investment is also accounted for under ASC 946. We consolidate the accounts of the Co-Investment into our consolidated financial statements, retaining the fair value basis of accounting.

At March 31, 2016, we had six real estate fund investments with an aggregate fair value of $566,696,000, or $200,549,000 in excess of cost, and had remaining unfunded commitments of $102,212,000, of which our share was $25,553,000. Below is a summary of income from the Fund and the Co-Investment for the three months ended March 31, 2016 and 2015.

(Amounts in thousands)		For the Three Months Ended March 31,
		2016		2015
Net investment income		$	4,673	$	6,450
Net realized gain on exited investments			14,676		24,705
Previously recorded unrealized gain on exited investment			(14,254)		(23,279)
Net unrealized gains on held investments			6,189		16,213
Income from real estate fund investments			11,284		24,089
Less income attributable to noncontrolling interests			(5,973)		(13,539)
Income from real estate fund investments attributable to Vornado ⁽¹⁾		$	5,311	$	10,550


(1)	Excludes management, leasing and development fees of $760 and $704 for the three months ended March 31, 2016 and 2015, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

5. Marketable Securities

Below is a summary of our marketable securities portfolio as of March 31, 2016 and December 31, 2015.


(Amounts in thousands)		As of March 31, 2016						As of December 31, 2015
				GAAP		Unrealized				GAAP		Unrealized
		Fair Value		Cost		Gain		Fair Value		Cost		Gain
Equity securities:
	Lexington Realty Trust	$	158,833	$	72,549	$	86,284	$	147,752	$	72,549	$	75,203
	Other		3,258		-		3,258		3,245		-		3,245
		$	162,091	$	72,549	$	89,542	$	150,997	$	72,549	$	78,448

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6. Investments in Partially Owned Entities

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

As of March 31, 2016, we own 1,654,068 Alexander’s common shares, representing a 32.4% interest in Alexander’s. We account for our investment in Alexander’s under the equity method. We manage, lease and develop Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.

As of March 31, 2016, the market value (“fair value” pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s March 31, 2016 closing share price of $380.55, was $629,456,000, or $501,192,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, 2016, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $40,162,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.

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

As of March 31, 2016, we own 5,717,184 UE operating partnership units, representing a 5.4% ownership interest in UE. We account for our investment in UE under the equity method and record our share of UE’s net income or loss on a one-quarter lag basis. During 2015, we provided transition services to UE, primarily for information technology, human resources, tax and financial planning. In 2016, we continue to provide UE information technology support. UE is providing us with leasing and property management services for (i) certain small retail properties that we plan to sell, and (ii) our affiliate, Alexander’s, Rego Park retail assets. As of March 31, 2016, the fair value of our investment in UE, based on UE’s March 31, 2016 closing share price of $25.84, was $147,732,000, or $121,505,000 in excess of the carrying amount on our consolidated balance sheet.

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

As of March 31, 2016, we own 6,250,000 PREIT operating partnership units, representing an 8.1% interest in PREIT. We account for our investment in PREIT under the equity method and record our share of PREIT’s net income or loss on a one-quarter lag basis. As of March 31, 2016, the fair value of our investment in PREIT, based on PREIT’s March 31, 2016 closing share price of $21.85, was $136,563,000, or $8,495,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, 2016, the carrying amount of our investment in PREIT exceeds our share of the equity in the net assets of PREIT by approximately $64,827,000. The majority of this basis difference resulted from the excess of the fair value of the PREIT operating units received over our share of the book value of PREIT’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of PREIT’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in PREIT’s net loss. The basis difference related to the land will be recognized upon disposition of our investment.

One Park Avenue

On March 7, 2016, we completed a $300,000,000 refinancing of our 55% owned joint venture, One Park Avenue, a 947,000 square foot Manhattan office building. The loan matures in March 2021 and is interest only at LIBOR plus 1.75% (2.19% at March 31, 2016). The property was previously encumbered by a 4.995%, $250,000,000 mortgage maturing in March 2016.

Mezzanine Loan – New York

On March 17, 2016, we entered into a joint venture, in which we own a 33.3% interest, which owns a $138,240,000 mezzanine loan. The interest rate is LIBOR plus 8.875% (9.32% at March 31, 2016) and the debt matures in November 2016, with two three-month extension options. At March 31, 2016, the joint venture has an $11,760,000 remaining commitment, of which our share is $3,920,000. The joint venture’s investment is subordinate to $350,000,000 of third party debt. We account for our investment in the joint venture under the equity method.

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6. Investments in Partially Owned Entities – continued

Below are schedules summarizing our investments in, and income (loss) from, partially owned entities.

(Amounts in thousands)		Percentage
		Ownership at		Balance as of
		March 31, 2016		March 31, 2016		December 31, 2015
Investments:
	Partially owned office buildings⁽¹⁾		Various	$	869,233	$	909,782
	Alexander’s		32.4%		128,264		133,568
	PREIT		8.1%		128,068		133,375
	India real estate ventures		4.1%-36.5%		48,037		48,310
	UE		5.4%		26,227		25,351
	Other investments⁽²⁾		Various		353,421		300,036
				$	1,553,250	$	1,550,422


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue, 512 West 22nd Street and others.
(2)	Includes interests in Independence Plaza, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street, Toys "R" Us, Inc. (which has a carrying amount of zero) and others.

(Amounts in thousands)			Percentage
			Ownership at		For the Three Months Ended March 31,
			March 31, 2016		2016		2015
Our Share of Net Income (Loss):
	Alexander's (see page 13 for details):
		Equity in net income		32.4%	$	6,937	$	5,594
		Management, leasing and development fees				1,725		2,097
						8,662		7,691

	UE (see page 13 for details):
		Equity in net earnings		5.4%		876		-
		Management fees				209		584
						1,085		584

	Partially owned office buildings⁽¹⁾			Various		(14,249)		(9,296)

	PREIT (see page 13 for details)			8.1%		(4,288)		-

	India real estate ventures			4.1%-36.5%		(686)		(109)

	Other investments⁽²⁾			Various		5,236		(1,613)

					$	(4,240)	$	(2,743)


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue, 512 West 22nd Street and others.
(2)	Includes interests in Independence Plaza, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street, Toys "R" Us, Inc. and others.

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7. Dispositions

The tables below set forth the assets and liabilities related to discontinued operations at March 31, 2016 and December 31, 2015 and their combined results of operations and cash flows for the three months ended March 31, 2016 and 2015.

(Amounts in thousands)	Balance as of
	March 31, 2016		December 31, 2015
Assets related to discontinued operations:
Real estate, net	$	29,517	$	29,561
Other assets		6,997		7,459
	$	36,514	$	37,020

Liabilities related to discontinued operations:
Other liabilities	$	12,902	$	12,470
	$	12,902	$	12,470


(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
Income from discontinued operations:
Total revenues	$	1,182	$	20,296
Total expenses		466		13,373
		716		6,923
Transaction related costs (primarily UE spin off)		-		(22,645)
Net gain on sale of lease position in Geary Street, CA		-		21,376
Net gains on sale of real estate		-		10,867
Impairment losses		-		(256)
Pretax income from discontinued operations		716		16,265
Income tax expense		-		(86)
Income from discontinued operations	$	716	$	16,179


Cash flows related to discontinued operations:
Cash flows from operating activities	$	1,654	$	(36,672)
Cash flows from investing activities		-		310,069

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8. Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily acquired below-market leases) as of March 31, 2016 and December 31, 2015.

(Amounts in thousands)	Balance as of
	March 31, 2016		December 31, 2015
Identified intangible assets:
Gross amount	$	406,482	$	415,261
Accumulated amortization		(188,094)		(187,360)
Net	$	218,388	$	227,901
Identified intangible liabilities (included in deferred revenue):
Gross amount	$	607,241	$	643,488
Accumulated amortization		(307,858)		(325,340)
Net	$	299,383	$	318,148

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $17,507,000 and $12,450,000 for the three months ended March 31, 2016 and 2015, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2017 is as follows:

(Amounts in thousands)
2017	$	44,463
2018		42,991
2019		30,973
2020		23,320
2021		18,263

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $7,793,000 and $6,185,000 for the three months ended March 31, 2016 and 2015, respectively. Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2017 is as follows:

(Amounts in thousands)
2017	$	24,427
2018		20,063
2019		15,779
2020		12,345
2021		10,957

We are a tenant under ground leases for certain properties. Amortization of these acquired below-market leases, net of above-market leases, resulted in an increase to rent expense of $458,000 and $458,000 for the three months ended March 31, 2016 and 2015, respectively. Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2017 is as follows:

(Amounts in thousands)
2017	$	1,832
2018		1,832
2019		1,832
2020		1,832
2021		1,832

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9. Debt

On February 8, 2016, we completed a $700,000,000 refinancing of 770 Broadway, a 1,158,000 square foot Manhattan office building. The five-year loan is interest only at LIBOR plus 1.75%, (2.19% at March 31, 2016) which was swapped for four and a half years to a fixed rate of 2.56%. The Company realized net proceeds of approximately $330,000,000. The property was previously encumbered by a 5.65%, $353,000,000 mortgage which was to mature in March 2016.

On March 15, 2016, we notified the servicer of the $678,000,000 mortgage loan on the Skyline properties in Virginia that cash flow will be insufficient to service the debt and pay other property related costs and expenses and that we were not willing to fund additional cash shortfalls. Accordingly, at our request, the loan has been transferred to the special servicer. Consequently, based on our shortened estimated holding period for the underlying assets, we concluded that the excess of carrying amount over our estimate of fair value was not recoverable and recognized a $160,700,000 non-cash impairment loss in the first quarter of 2016.

The following is a summary of our debt:

(Amounts in thousands)			Interest Rate at		Balance at
			March 31, 2016		March 31, 2016		December 31, 2015
Mortgages Payable:
	Fixed rate			4.04%	$	6,695,401	$	6,356,634
	Variable rate			2.25%		3,259,067		3,258,204
		Total		3.46%		9,954,468		9,614,838
	Deferred financing costs, net and other					(110,226)		(101,125)
		Total, net			$	9,844,242	$	9,513,713

Unsecured Debt:
	Senior unsecured notes			3.68%	$	850,000	$	850,000
	Deferred financing costs, net and other					(5,486)		(5,841)
		Senior unsecured notes, net				844,514		844,159

	Unsecured term loan			1.58%		375,000		187,500
	Deferred financing costs, net and other					(3,924)		(4,362)
		Unsecured term loan, net				371,076		183,138

	Unsecured revolving credit facilities			-		-		550,000

		Total, net			$	1,215,590	$	1,577,297

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10. Redeemable Noncontrolling Interests

Redeemable noncontrolling interests on our consolidated balance sheets are comprised primarily of Class A Operating Partnership units held by third parties and are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in our consolidated statements of changes in equity. Below is a table summarizing the activity of redeemable noncontrolling interests.

(Amounts in thousands)
Balance at December 31, 2014	$	1,337,780
Net income		5,287
Other comprehensive loss		(1,288)
Distributions		(7,280)
Redemption of Class A units for common shares, at redemption value		(23,493)
Adjustments to carry redeemable Class A units at redemption value		(25,349)
Other, net		19,133
Balance at March 31, 2015	$	1,304,790

Balance at December 31, 2015	$	1,229,221
Net loss		(7,487)
Other comprehensive income		427
Distributions		(7,835)
Redemption of Class A units for common shares, at redemption value		(14,482)
Adjustments to carry redeemable Class A units at redemption value		(36,524)
Other, net		14,364
Balance at March 31, 2016	$	1,177,684

As of March 31, 2016 and December 31, 2015, the aggregate redemption value of redeemable Class A units was $1,172,256,000 and $1,223,793,000, respectively.

Redeemable noncontrolling interests exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $50,561,000 as of March 31, 2016 and December 31, 2015. Changes in the value from period to period, if any, are charged to “interest and debt expense” on our consolidated statements of income.

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11. Accumulated Other Comprehensive Income (“AOCI”)

The following tables set forth the changes in accumulated other comprehensive income by component.

(Amounts in thousands)				Securities		Pro rata share of		Interest
				available-		nonconsolidated		rate
		Total		for-sale		subsidiaries' OCI		swaps		Other
For the Three Months Ended March 31, 2016
Balance as of December 31, 2015		$	46,921	$	78,448	$	(9,319)	$	(19,368)	$	(2,840)
	OCI before reclassifications		6,478		11,094		6		(4,195)		(427)
	Amounts reclassified from AOCI		-		-		-		-		-
Net current period OCI			6,478		11,094		6		(4,195)		(427)
Balance as of March 31, 2016		$	53,399	$	89,542	$	(9,313)	$	(23,563)	$	(3,267)


For the Three Months Ended March 31, 2015
Balance as of December 31, 2014		$	93,267	$	133,774	$	(8,992)	$	(25,803)	$	(5,712)
	OCI before reclassifications		(20,658)		(21,332)		157		(776)		1,293
	Amounts reclassified from AOCI		-		-		-		-		-
Net current period OCI			(20,658)		(21,332)		157		(776)		1,293
Balance as of March 31, 2015		$	72,609	$	112,442	$	(8,835)	$	(26,579)	$	(4,419)

12. Variable Interest Entities (“VIEs”)

At March 31, 2016 and December 31, 2015, we have several unconsolidated VIEs. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions that significantly affect these entities’ economic performance. We account for our investment in these entities under the equity method (see Note 6 – Investments in Partially Owned Entities). As of March 31, 2016 and December 31, 2015, the net carrying amounts of our investment in these entities were $361,921,000 and $379,939,000, respectively, and our maximum exposure to loss in these entities, is limited to our investments.

We adopted ASU 2015-02 on January 1, 2016 which resulted in the identification of several VIEs at March 31, 2016. Prior to the adoption of ASU 2015-02, these entities were consolidated under the voting interest model. Our most significant consolidated VIEs are our Operating Partnership, real estate fund investments, and certain properties that have non-controlling interests. These entities are VIEs because the non-controlling interests do not have substantive kick-out or participating rights. We consolidate these entities because we control all significant business activities.

We conduct our business through, and all of our assets and liabilities are held by, our Operating Partnership which is a VIE.

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13. Fair Value Measurements

ASC 820 defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.

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

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) real estate fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet), (iv) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units), and (v) interest rate swaps. The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy as of March 31, 2016 and December 31, 2015, respectively.

(Amounts in thousands)		As of March 31, 2016
		Total		Level 1		Level 2		Level 3
Marketable securities		$	162,091	$	162,091	$	-	$	-
Real estate fund investments (75% of which is attributable to
	noncontrolling interests)		566,696		-		-		566,696
Deferred compensation plan assets (included in other assets)			116,824		59,640		-		57,184
Interest rate swap (included in other assets)			5,039		-		5,039		-
	Total assets	$	850,650	$	221,731	$	5,039	$	623,880

Mandatorily redeemable instruments (included in other liabilities)		$	50,561	$	50,561	$	-	$	-
Interest rate swaps (included in other liabilities)			28,914		-		28,914		-
	Total liabilities	$	79,475	$	50,561	$	28,914	$	-

(Amounts in thousands)		As of December 31, 2015
		Total		Level 1		Level 2		Level 3
Marketable securities		$	150,997	$	150,997	$	-	$	-
Real estate fund investments (75% of which is attributable to
	noncontrolling interests)		574,761		-		-		574,761
Deferred compensation plan assets (included in other assets)			117,475		58,289		-		59,186
	Total assets	$	843,233	$	209,286	$	-	$	633,947

Mandatorily redeemable instruments (included in other liabilities)		$	50,561	$	50,561	$	-	$	-
Interest rate swaps (included in other liabilities)			19,600		-		19,600		-
	Total liabilities	$	70,161	$	50,561	$	19,600	$	-

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(UNAUDITED)

13. Fair Value Measurements – continued

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

Real Estate Fund Investments

At March 31, 2016, we had six real estate fund investments with an aggregate fair value of $566,696,000, or $200,549,000 in excess of cost. These investments are classified as Level 3. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 1.3 to 4.8 years. Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor. Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs.

The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property’s outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, and current and anticipated market conditions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these real estate fund investments at March 31, 2016 and December 31, 2015.

				Weighted Average
		Range		(based on fair value of investments)
Unobservable Quantitative Input		March 31, 2016	December 31, 2015	March 31, 2016	December 31, 2015
	Discount rates	12.0% to 14.9%	12.0% to 14.9%	13.5%	13.6%
	Terminal capitalization rates	4.8% to 6.1%	4.8% to 6.1%	5.4%	5.5%

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate, may be partially offset by a change in the discount rate. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

The table below summarizes the changes in the fair value of real estate fund investments that are classified as Level 3, for the three months ended March 31, 2016 and 2015.

(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
Beginning balance	$	574,761	$	513,973
Purchases		-		95,000
Dispositions / distributions		(14,676)		(72,186)
Net unrealized gains		6,189		16,213
Net realized gains		422		1,426
Ending balance	$	566,696	$	554,426

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13. Fair Value Measurements – continued

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

Deferred Compensation Plan Assets

Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis. The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.

The table below summarizes the changes in the fair value of deferred compensation plan assets that are classified as Level 3, for the three months ended March 31, 2016 and 2015.

(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
Beginning balance	$	59,186	$	63,315
Purchases		1,166		624
Sales		(1,372)		(438)
Realized and unrealized (loss) gain		(1,907)		1,335
Other, net		111		-
Ending balance	$	57,184	$	64,836

Fair Value Measurements on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist primarily of real estate assets required to be measured for impairment at March 31, 2016. There are no assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2015. The fair values of real estate assets required to be measured for impairment were determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity.

(Amounts in thousands)	As of March 31, 2016
	Total		Level 1		Level 2		Level 3
Real estate assets (Skyline properties)	$	192,003	$	-	$	-	$	192,003

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13. Fair Value Measurements – continued

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government), and our secured and unsecured debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair value of our secured and unsecured debt is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, 2016 and December 31, 2015.

(Amounts in thousands)		As of March 31, 2016					As of December 31, 2015
		Carrying			Fair		Carrying		Fair
		Amount			Value		Amount		Value
Cash equivalents		$	1,445,442		$	1,445,000	$	1,295,980	$	1,296,000
Debt:
	Mortgages payable	$	9,954,468		$	9,705,000	$	9,614,838	$	9,306,000
	Senior unsecured notes		850,000			887,000		850,000		868,000
	Unsecured term loan		375,000			375,000		187,500		187,500
	Unsecured revolving credit facilities		-			-		550,000		550,000
	Total	$	11,179,468	⁽¹⁾	$	10,967,000	$	11,202,338	$	10,911,500


(1)	Excludes $119,636 of deferred financing costs, net and other.

14. Incentive Compensation

Our 2010 Omnibus Share Plan (the “Plan”) provides for grants of incentive and non-qualified stock options, restricted shares, restricted Operating Partnership units and Out-Performance Plan awards to certain of our employees and officers. We account for all equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation. Equity-based compensation expense was $14,571,000 and $20,142,000 for the three months ended March 31, 2016 and 2015, respectively.

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15. Fee and Other Income

The following table sets forth the details of fee and other income:

(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
BMS cleaning fees	$	18,146	$	22,633
Management and leasing fees		4,799		4,192
Lease termination fees		2,405		3,747
Other income		8,620		9,035
	$	33,970	$	39,607

Management and leasing fees include management fees from Interstate Properties, a related party, of $134,000 and $139,000 for the three months ended March 31, 2016 and 2015, respectively. The above table excludes fee income from partially owned entities, which is included in “loss from partially owned entities” (see Note 6 – Investments in Partially Owned Entities).

16. Interest and Other Investment Income, Net

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

(Amounts in thousands)		For the Three Months Ended March 31,
		2016		2015
Dividends on marketable securities		$	3,215	$	3,203
Mark-to-market (loss) income of investments in our deferred compensation plan⁽¹⁾			(1,938)		2,859
Interest on loans receivable			748		2,824
Other, net			1,493		1,906
		$	3,518	$	10,792


(1)	This (loss) income is entirely offset by the income (expense) resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.

17. Interest and Debt Expense

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

(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
Interest expense	$	100,295	$	95,328
Amortization of deferred financing costs		9,265		7,456
Capitalized interest and debt expense		(9,071)		(11,110)
	$	100,489	$	91,674

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18. (Loss) Income Per Share

The following table provides a reconciliation of both net (loss) income and the number of common shares used in the computation of (i) basic (loss) income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares, and (ii) diluted (loss) income per common share - which includes the weighted average common shares and dilutive share equivalents. Dilutive share equivalents may include our Series A convertible preferred shares, employee stock options and restricted stock awards.

(Amounts in thousands, except per share amounts)			For the Three Months Ended March 31,
			2016		2015
Numerator:
	(Loss) income from continuing operations, net of income attributable
		to noncontrolling interests	$	(94,471)	$	88,848
	Income from discontinued operations, net of income attributable to noncontrolling interests			672		15,229
	Net (loss) income attributable to Vornado			(93,799)		104,077
	Preferred share dividends			(20,364)		(19,484)
	Net (loss) income attributable to common shareholders			(114,163)		84,593
	Earnings allocated to unvested participating securities			(16)		(19)
	Numerator for basic and diluted (loss) income per share		$	(114,179)	$	84,574

Denominator:
	Denominator for basic (loss) income per share – weighted average shares			188,658		187,999
	Effect of dilutive securities⁽¹⁾:
		Employee stock options and restricted share awards		-		1,337
	Denominator for diluted (loss) income per share – weighted average
		shares and assumed conversions		188,658		189,336

(LOSS) INCOME PER COMMON SHARE – BASIC:
	(Loss) income from continuing operations, net		$	(0.61)	$	0.37
	Income from discontinued operations, net			-		0.08
	Net (loss) income per common share		$	(0.61)	$	0.45

(LOSS) INCOME PER COMMON SHARE – DILUTED:
	(Loss) income from continuing operations, net		$	(0.61)	$	0.37
	Income from discontinued operations, net			-		0.08
	Net (loss) income per common share		$	(0.61)	$	0.45


(1)	The effect of dilutive securities for the three months ended March 31, 2016 and 2015 excludes an aggregate of 13,281 and 11,488 weighted average common share equivalents, respectively, as their effect was anti-dilutive.

19. Commitments and Contingencies

Insurance

We maintain general liability insurance with limits of $300,000,000 per occurrence and per property, and all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake. Our California properties have earthquake insurance with coverage of $180,000,000 per occurrence and in the annual aggregate, subject to a deductible in the amount of 5% of the value of the affected property. We maintain coverage for terrorism acts with limits of $4.0 billion per occurrence and in the aggregate, and $2.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by Terrorism Risk Insurance Program Reauthorization Act of 2015, which expires in December 2020.

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19. Commitments and Contingencies - continued

Insurance - continued

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism including NBCR acts. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third party insurance companies and the Federal government with no exposure to PPIC. For NBCR acts, PPIC is responsible for a deductible of $2,400,000 per occurrence and 16% of the balance of a covered loss and the Federal government is responsible for the remaining 84% of a covered loss. We are ultimately responsible for any loss incurred by PPIC.

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

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

Other Commitments and Contingencies

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

Each of our properties has been subjected to varying degrees of environmental assessment at various times. The environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

Our mortgage loans are non-recourse to us. However, in certain cases we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of March 31, 2016, the aggregate dollar amount of these guarantees and master leases is approximately $481,000,000.

At March 31, 2016, $32,540,000 of letters of credit were outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB. Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

As of March 31, 2016, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $80,000,000.

As of March 31, 2016, we have construction commitments aggregating approximately $810,700,000.

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20. Segment Information

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the three months ended March 31, 2016 and 2015.


(Amounts in thousands)		For the Three Months Ended March 31, 2016
			Total		New York			Washington, DC			Other
Total revenues			$	613,037	$	410,825		$	128,012		$	74,200
Total expenses				613,317		269,595			256,565			87,157
Operating (loss) income				(280)		141,230			(128,553)			(12,957)
(Loss) income from partially owned entities				(4,240)		(3,563)			(2,043)			1,366
Income from real estate fund investments				11,284		-			-			11,284
Interest and other investment income, net				3,518		1,115			58			2,345
Interest and debt expense				(100,489)		(54,586)			(15,935)			(29,968)
Net gain on disposition of wholly owned and partially
	owned assets			714		-			-			714
(Loss) income before income taxes				(89,493)		84,196			(146,473)			(27,216)
Income tax expense				(2,831)		(959)			(264)			(1,608)
(Loss) income from continuing operations				(92,324)		83,237			(146,737)			(28,824)
Income from discontinued operations				716		-			-			716
Net (loss) income				(91,608)		83,237			(146,737)			(28,108)
Less net (income) loss attributable to noncontrolling interests				(2,191)		(3,429)			-			1,238
Net (loss) income attributable to Vornado				(93,799)		79,808			(146,737)			(26,870)
Interest and debt expense⁽²⁾				126,120		71,198			19,406			35,516
Depreciation and amortization⁽²⁾				174,811		108,403			42,681			23,727
Income tax expense ⁽²⁾				3,261		1,090			265			1,906
EBITDA⁽¹⁾			$	210,393	$	260,499	⁽³⁾	$	(84,385)	⁽⁴⁾	$	34,279	⁽⁵⁾


(Amounts in thousands)		For the Three Months Ended March 31, 2015
		Total		New York			Washington, DC			Other
Total revenues		$	606,802	$	399,513		$	133,968		$	73,321
Total expenses			439,088		252,760			92,997			93,331
Operating income (loss)			167,714		146,753			40,971			(20,010)
(Loss) income from partially owned entities			(2,743)		(5,663)			131			2,789
Income from real estate fund investments			24,089		-			-			24,089
Interest and other investment income, net			10,792		1,862			13			8,917
Interest and debt expense			(91,674)		(45,351)			(18,160)			(28,163)
Net gain on disposition of wholly owned and partially
	owned assets		1,860		-			-			1,860
Income (loss) before income taxes			110,038		97,601			22,955			(10,518)
Income tax (expense) benefit			(971)		(943)			674			(702)
Income (loss) from continuing operations			109,067		96,658			23,629			(11,220)
Income from discontinued operations			16,179		-			-			16,179
Net income			125,246		96,658			23,629			4,959
Less net income attributable to noncontrolling interests			(21,169)		(1,506)			-			(19,663)
Net income (loss) attributable to Vornado			104,077		95,152			23,629			(14,704)
Interest and debt expense⁽²⁾			114,675		58,667			21,512			34,496
Depreciation and amortization⁽²⁾			156,450		94,124			40,752			21,574
Income tax (benefit) expense⁽²⁾			(739)		1,002			(2,636)			895
EBITDA⁽¹⁾		$	374,463	$	248,945	⁽³⁾	$	83,257	⁽⁴⁾	$	42,261	⁽⁵⁾


See notes on the following pages.

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20. Segment Information – continued


Notes to preceding tabular information:


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


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


(3)	The elements of "New York" EBITDA are summarized below.

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Office^(a)		$	152,729	$	154,309
	Retail			93,323		81,305
	Residential			6,350		5,050
	Alexander's			11,569		10,407
	Hotel Pennsylvania			(3,472)		(2,126)
		Total New York	$	260,499	$	248,945


	(a)	2015 includes $3,540 of EBITDA from 20 Broad Street which was sold in December 2015. Excluding this item, EBITDA was $150,769.


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

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Office, excluding the Skyline properties ^(a)		$	61,988	$	67,385
	Skyline properties			5,092		6,055
	Skyline properties impairment loss			(160,700)		-
		Total Office		(93,620)		73,440
	Residential			9,235		9,817
		Total Washington, DC	$	(84,385)	$	83,257


	(a)	2015 includes $1,923 of EBITDA from 1750 Pennsylvania Avenue which was sold in September 2015. Excluding this item, EBITDA was $65,462.

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20. Segment Information – continued


Notes to preceding tabular information - continued:


(5)	The elements of "Other" EBITDA are summarized below.

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Our share of real estate fund investments:
		Income before net realized/unrealized gains	$	2,231	$	1,614
		Net realized/unrealized gains on investments		1,561		5,548
		Carried interest		1,519		3,388
	Total			5,311		10,550
	theMART (including trade shows)			23,028		21,041
	555 California Street			11,615		12,401
	India real estate ventures			1,319		1,841
	Other investments			12,322		6,759
				53,595		52,592
	Corporate general and administrative expenses^{(a) (b)}			(30,606)		(35,942)
	Investment income and other, net^(a)			6,975		8,762
	Acquisition and transaction related costs			(4,607)		(1,981)
	UE and residual retail properties discontinued operations^(c)			721		22,257
	Net gain on sale of residential condominiums			714		1,860
	Net income attributable to noncontrolling interests in the Operating Partnership			7,487		(5,287)
			$	34,279	$	42,261


	(a)	The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $1,938 loss for the three months ended March 31, 2016 and $2,859 income for the three months ended March 31, 2015.
	(b)	The three months ended March 31, 2015 includes a cumulative catch up of $4,542 from the acceleration of recognition of compensation expense related to the modification of the 2012-2014 Out-Performance Plans.
	(c)	The three months ended March 30, 2015 includes $22,645 of transaction costs related to the spin-off of our strip shopping centers and malls.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Trustees

Vornado Realty Trust

New York, New York

We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust (the “Company”) as of March 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the three month periods ended March 31, 2016 and 2015. These interim financial statements are the responsibility of the Company’s management.

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

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Vornado Realty Trust as of December 31, 2015, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2016, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2015 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey

May 2, 2016

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

Certain statements contained in this Quarterly Report constitute forward‑looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three months ended March 31, 2016. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified in order to conform to current year presentation.

Overview

Business Objective and Operating Strategy

Our business objective is to maximize shareholder value, which we measure by the total return provided to our shareholders. Below is a table comparing our performance to the FTSE NAREIT Office Index (“Office REIT”) and the MSCI US REIT Index (“MSCI”) for the following periods ended March 31, 2016:

		Total Return⁽¹⁾
		Vornado	Office REIT	MSCI⁽²⁾
	Three-month	(4.8%)	0.4%	6.3%
	One-year	(13.4%)	(5.6%)	4.1%
	Three-year	35.8%	24.1%	34.7%
	Five-year	40.7%	40.9%	75.0%
	Ten-year	58.1%	43.6%	87.6%


(1)	Past performance is not necessarily indicative of future performance.
(2)	Formerly known as the Morgan Stanley REIT Index.

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

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

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

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

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

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

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

We expect to finance our growth, acquisitions and investments using internally generated funds, proceeds from asset sales and by accessing the public and private capital markets. We may also offer Vornado common or preferred shares or Operating Partnership units in exchange for property and may repurchase or otherwise reacquire these securities in the future.

We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015, for additional information regarding these factors.

Overview – continued

Quarter Ended March 31, 2016 Financial Results Summary

Net loss attributable to common shareholders for the quarter ended March 31, 2016 was $114,163,000, or $0.61 per diluted share, compared to net income attributable to common shareholders of $84,593,000, or $0.45 per diluted share, for the prior year’s quarter. Net loss for the quarter ended March 31, 2016 includes $165,053,000, of which $160,700,000 relates to the Skyline properties, of real estate impairment losses. Net income for the quarter ended March 31, 2015 includes $10,867,000 of net gains on sale of real estate. In addition, the quarters ended March 31, 2016 and 2015 include certain other items that affect comparability, which are listed in the table below. The aggregate of net gains on sale of real estate, real estate impairment losses and the items in the table below, net of amounts attributable to noncontrolling interests, increased net loss attributable to common shareholders for the quarter ended March 31, 2016 by $156,408,000, or $0.83 per diluted share, and increased net income attributable to common shareholders for the quarter ended March 31, 2015 by $23,057,000, or $0.12 per diluted share.

Funds From Operations attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended March 31, 2016 was $203,137,000, or $1.07 per diluted share, compared to $220,084,000, or $1.16 per diluted share, for the prior year’s quarter. FFO for the quarters ended March 31, 2016 and 2015 include certain items that affect comparability, which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO for the quarter ended March 31, 2016 by $2,505,000, or $0.01 per diluted share, and increased FFO for the quarter ended March 31, 2015 by $17,163,000, or $0.09 per diluted share.


(Amounts in thousands)		For the Three Months Ended March 31,
		2016		2015
Items that affect comparability income (expense):
	Acquisition and transaction related costs	$	(4,607)	$	(1,981)
	FFO from discontinued operations and sold properties		721		14,188
	Net gain on sale of residential condominiums		714		1,860
	Toys FFO		500		1,454
	Other		-		2,721
			(2,672)		18,242
Noncontrolling interests' share of above adjustments			167		(1,079)
Items that affect comparability, net		$	(2,505)	$	17,163

The percentage increase (decrease) in same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and cash basis same store EBITDA of our operating segments for the quarter ended March 31, 2016 over the quarter ended March 31, 2015 and the trailing quarter ended December 31, 2015 are summarized below.


			New York			Washington, DC
Same Store EBITDA:
	March 31, 2016 vs. March 31, 2015
		Same store EBITDA	5.5	%	⁽¹⁾	(2.9	%)
		Cash basis same store EBITDA	1.1	%	⁽¹⁾	(3.1	%)
	March 31, 2016 vs. December 31, 2015
		Same store EBITDA	(2.9	%)	⁽²⁾	(0.1	%)
		Cash basis same store EBITDA	(1.3	%)	⁽²⁾	1.2	%


(1)	Excluding Hotel Pennsylvania, same store EBITDA increased by 6.0% and by 1.7% on a cash basis.
(2)	Excluding Hotel Pennsylvania, same store EBITDA increased by 1.6% and by 4.4% on a cash basis.

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

Overview – continued

2016 Investments

2016 Financings

On February 8, 2016, we completed a $700,000,000 refinancing of 770 Broadway, a 1,158,000 square foot Manhattan office building. The five-year loan is interest only at LIBOR plus 1.75%, (2.19% at March 31, 2016) which was swapped for four and a half years to a fixed rate of 2.56%. We realized net proceeds of approximately $330,000,000. The property was previously encumbered by a 5.65%, $353,000,000 mortgage which was to mature in March 2016.

Recently Issued Accounting Literature

Overview – continued

Recently Issued Accounting Literature - continued

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015 in Management’s Discussion and Analysis of Financial Condition. There have been no significant changes to our policies during 2016.

Overview - continued

Leasing Activity:

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

(Square feet in thousands)					New York				Washington, DC
					Office		Retail		Office
Three Months Ended March 31, 2016
	Total square feet leased					737		38		569
	Our share of square feet leased:					552		29		563
		Initial rent⁽¹⁾			$	84.32	$	272.01	$	38.36
		Weighted average lease term (years)				12.1		11.9		3.3
		Second generation relet space:
			Square feet			525		21		451
			Cash basis:
				Initial rent⁽¹⁾	$	84.15	$	229.26	$	38.62
				Prior escalated rent	$	65.63	$	218.35	$	39.59
				Percentage increase (decrease)		28.2%		5.0%		(2.5%)
			GAAP basis:
				Straight-line rent⁽²⁾	$	85.49	$	239.55	$	36.25
				Prior straight-line rent	$	64.46	$	206.78	$	37.74
				Percentage increase (decrease)		32.6%		15.8%		(3.9%)
		Tenant improvements and leasing commissions:
				Per square foot	$	82.59	$	122.08	$	9.93
				Per square foot per annum	$	6.83	$	10.26	$	3.01
				Percentage of initial rent		8.1%		3.8%		7.8%



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

Overview - continued

Square footage (in service) and Occupancy as of March 31, 2016:

(Square feet in thousands)			Square Feet (in service)
		Number of	Total	Our
		Properties	Portfolio	Share	Occupancy %
New York:
	Office	35	20,187	17,141	96.4%
	Retail	64	2,675	2,463	94.2%
	Residential - 1,711 units	11	1,561	827	94.5%
	Alexander's, including 312 residential units	7	2,419	784	93.6%
	Hotel Pennsylvania	1	1,400	1,400
			28,242	22,615	96.2%

Washington, DC:
	Office, excluding the Skyline properties	49	12,978	10,620	90.6%
	Skyline properties	8	2,648	2,648	47.4%
	Total Office	57	15,626	13,268	81.9%
	Residential - 2,414 units	7	2,597	2,455	96.8%
	Other	7	598	598	100.0%
			18,821	16,321	84.8%

Other:
	theMART	1	3,662	3,653	97.8%
	555 California Street	3	1,736	1,215	93.3%
	Other	2	763	763	100.0%
			6,161	5,631

Total square feet at March 31, 2016			53,224	44,567

Overview - continued

Square footage (in service) and Occupancy as of December 31, 2015:

(Square feet in thousands)			Square Feet (in service)
		Number of	Total	Our
		properties	Portfolio	Share	Occupancy %
New York:
	Office	35	21,288	17,627	96.3%
	Retail	63	2,641	2,418	96.2%
	Residential - 1,711 units	11	1,561	827	94.1%
	Alexander's, including 296 residential units	7	2,419	784	99.7%
	Hotel Pennsylvania	1	1,400	1,400
			29,309	23,056	96.4%

Washington, DC:
	Office, excluding the Skyline properties	49	13,136	10,781	90.0%
	Skyline Properties	8	2,648	2,648	50.1%
	Total Office	57	15,784	13,429	82.1%
	Residential - 2,414 units	7	2,597	2,455	96.1%
	Other	7	597	597	100.0%
			18,978	16,481	84.8%

Other:
	theMART	1	3,658	3,649	98.5%
	555 California Street	3	1,736	1,215	93.3%
	Other	2	763	763	100.0%
			6,157	5,627

Total square feet at December 31, 2015			54,444	45,164

Overview - continued

Washington, DC Segment

Comparable EBITDA for the three months ended March 31, 2016, was $5,019,000 behind the prior year's three months and consistent with our expected results for the first quarter. We expect that Washington’s 2016 comparable EBITDA will be approximately $7,000,000 to $11,000,000 lower than 2015, comprised of:

(i) core business being flat to $4,000,000 higher, offset by,

(ii) occupancy of Skyline properties declining further, decreasing EBITDA by approximately $6,500,000, and

(iii) 1726 M Street and 1150 17th Street being taken out of service (to prepare for the development in the future of a new Class A office building) decreasing EBITDA by approximately $4,500,000.

Of the 2,395,000 square feet subject to the effects of the Base Realignment and Closure (“BRAC”) statute, 348,000 square feet has been taken out of service for redevelopment and 1,452,000 square feet has been leased or is pending. The table below summarizes the status of the BRAC space as of March 31, 2016.

		Rent Per		Square Feet
		Square Foot		Total	Crystal City	Skyline	Rosslyn
Resolved:
	Relet as of March 31, 2016	$	37.36	1,442,000	969,000	389,000	84,000
	Leases pending		39.39	10,000	-	10,000	-
	Taken out of service for redevelopment			348,000	348,000	-	-
				1,800,000	1,317,000	399,000	84,000

To Be Resolved:
	Vacated as of March 31, 2016		34.78	595,000	119,000	412,000	64,000

Total square feet subject to BRAC				2,395,000	1,436,000	811,000	148,000

Net Income and EBITDA by Segment for the Three Months Ended March 31, 2016 and 2015

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ by segment for the three months ended March 31, 2016 and 2015.


(Amounts in thousands)		For the Three Months Ended March 31, 2016
			Total		New York			Washington, DC			Other
Total revenues			$	613,037	$	410,825		$	128,012		$	74,200
Total expenses				613,317		269,595			256,565			87,157
Operating (loss) income				(280)		141,230			(128,553)			(12,957)
(Loss) income from partially owned entities				(4,240)		(3,563)			(2,043)			1,366
Income from real estate fund investments				11,284		-			-			11,284
Interest and other investment income, net				3,518		1,115			58			2,345
Interest and debt expense				(100,489)		(54,586)			(15,935)			(29,968)
Net gain on disposition of wholly owned and partially
	owned assets			714		-			-			714
(Loss) income before income taxes				(89,493)		84,196			(146,473)			(27,216)
Income tax expense				(2,831)		(959)			(264)			(1,608)
(Loss) income from continuing operations				(92,324)		83,237			(146,737)			(28,824)
Income from discontinued operations				716		-			-			716
Net (loss) income				(91,608)		83,237			(146,737)			(28,108)
Less net (income) loss attributable to noncontrolling interests				(2,191)		(3,429)			-			1,238
Net (loss) income attributable to Vornado				(93,799)		79,808			(146,737)			(26,870)
Interest and debt expense⁽²⁾				126,120		71,198			19,406			35,516
Depreciation and amortization⁽²⁾				174,811		108,403			42,681			23,727
Income tax expense ⁽²⁾				3,261		1,090			265			1,906
EBITDA⁽¹⁾			$	210,393	$	260,499	⁽³⁾	$	(84,385)	⁽⁴⁾	$	34,279	⁽⁵⁾


(Amounts in thousands)		For the Three Months Ended March 31, 2015
		Total		New York			Washington, DC			Other
Total revenues		$	606,802	$	399,513		$	133,968		$	73,321
Total expenses			439,088		252,760			92,997			93,331
Operating income (loss)			167,714		146,753			40,971			(20,010)
(Loss) income from partially owned entities			(2,743)		(5,663)			131			2,789
Income from real estate fund investments			24,089		-			-			24,089
Interest and other investment income, net			10,792		1,862			13			8,917
Interest and debt expense			(91,674)		(45,351)			(18,160)			(28,163)
Net gain on disposition of wholly owned and partially
	owned assets		1,860		-			-			1,860
Income (loss) before income taxes			110,038		97,601			22,955			(10,518)
Income tax (expense) benefit			(971)		(943)			674			(702)
Income (loss) from continuing operations			109,067		96,658			23,629			(11,220)
Income from discontinued operations			16,179		-			-			16,179
Net income			125,246		96,658			23,629			4,959
Less net income attributable to noncontrolling interests			(21,169)		(1,506)			-			(19,663)
Net income (loss) attributable to Vornado			104,077		95,152			23,629			(14,704)
Interest and debt expense⁽²⁾			114,675		58,667			21,512			34,496
Depreciation and amortization⁽²⁾			156,450		94,124			40,752			21,574
Income tax (benefit) expense⁽²⁾			(739)		1,002			(2,636)			895
EBITDA⁽¹⁾		$	374,463	$	248,945	⁽³⁾	$	83,257	⁽⁴⁾	$	42,261	⁽⁵⁾


See notes on the following pages.

Net Income and EBITDA by Segment for the Three Months Ended March 31, 2016 and 2015 - continued


Notes to preceding tabular information:


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


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


(3)	The elements of "New York" EBITDA are summarized below.

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Office^(a)		$	152,729	$	154,309
	Retail			93,323		81,305
	Residential			6,350		5,050
	Alexander's			11,569		10,407
	Hotel Pennsylvania			(3,472)		(2,126)
		Total New York	$	260,499	$	248,945


	(a)	2015 includes $3,540 of EBITDA from 20 Broad Street which was sold in December 2015. Excluding this item, EBITDA was $150,769.


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

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Office, excluding the Skyline properties ^(a)		$	61,988	$	67,385
	Skyline properties			5,092		6,055
	Skyline properties impairment loss			(160,700)		-
		Total Office		(93,620)		73,440
	Residential			9,235		9,817
		Total Washington, DC	$	(84,385)	$	83,257


	(a)	2015 includes $1,923 of EBITDA from 1750 Pennsylvania Avenue which was sold in September 2015. Excluding this item, EBITDA was $65,462.

Net Income and EBITDA by Segment for the Three Months Ended March 31, 2016 and 2015 - continued


Notes to preceding tabular information - continued:


(5)	The elements of "Other" EBITDA are summarized below.

	(Amounts in thousands)		For the Three Months Ended March 31,
			2016		2015
	Our share of real estate fund investments:
		Income before net realized/unrealized gains	$	2,231	$	1,614
		Net realized/unrealized gains on investments		1,561		5,548
		Carried interest		1,519		3,388
	Total			5,311		10,550
	theMART (including trade shows)			23,028		21,041
	555 California Street			11,615		12,401
	India real estate ventures			1,319		1,841
	Other investments			12,322		6,759
				53,595		52,592
	Corporate general and administrative expenses^{(a) (b)}			(30,606)		(35,942)
	Investment income and other, net^(a)			6,975		8,762
	Acquisition and transaction related costs			(4,607)		(1,981)
	UE and residual retail properties discontinued operations^(c)			721		22,257
	Net gain on sale of residential condominiums			714		1,860
	Net loss (income) attributable to noncontrolling interests in the Operating Partnership			7,487		(5,287)
			$	34,279	$	42,261


	(a)	The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $1,938 loss for the three months ended March 31, 2016 and $2,859 income for the three months ended March 31, 2015.
	(b)	The three months ended March 31, 2015 includes a cumulative catch up of $4,542 from the acceleration of recognition of compensation expense related to the modification of the 2012-2014 Out-Performance Plans.
	(c)	The three months ended March 31, 2015 includes $22,645 of transaction costs related to the spin-off of our strip shopping centers and malls.

EBITDA by Region

Below is a summary of the percentages of EBITDA by geographic region, excluding discontinued operations and other items that affect comparability.

		For the Three Months Ended March 31,
		2016	2015
Region:
	New York City metropolitan area	70%	68%
	Washington, DC / Northern Virginia area	21%	23%
	Chicago, IL	6%	6%
	San Francisco, CA	3%	3%
		100%	100%

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015

Revenues

Our revenues, which consist primarily of property rentals, tenant expense reimbursements, and fee and other income, were $613,037,000 for the three months ended March 31, 2016, compared to $606,802,000 for the prior year’s three months, an increase of $6,235,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)		Total		New York			Washington, DC		Other
Increase (decrease) due to:
Property rentals:
	Acquisitions, dispositions and other	$	753	$	3,335		$	(2,582)	$	-
	Development and redevelopment		481		(90)			(56)		627
	Hotel Pennsylvania		(2,482)		(2,482)			-		-
	Trade shows		(653)		-			-		(653)
	Same store operations		21,119		21,166			(1,641)		1,594
			19,218		21,929			(4,279)		1,568

Tenant expense reimbursements:
	Acquisitions, dispositions and other		(195)		(96)			(99)		-
	Development and redevelopment		587		5			5		577
	Same store operations		(7,738)		(4,413)	⁽¹⁾		(1,734)		(1,591)
			(7,346)		(4,504)			(1,828)		(1,014)

Fee and other income:
	BMS cleaning fees		(4,487)		(4,644)	⁽²⁾		-		157
	Management and leasing fees		607		111			117		379
	Lease termination fees		(1,297)		(1,333)			36		-
	Other income		(460)		(247)			(2)		(211)
			(5,637)		(6,113)			151		325

Total increase (decrease) in revenues		$	6,235	$	11,312		$	(5,956)	$	879


(1)	Primarily from lease expirations in 2015.
(2)	Primarily from the termination of a third party cleaning arrangement in 2015.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Expenses

Our expenses, which consist primarily of operating, depreciation and amortization and general and administrative expenses, were $613,317,000 for the three months ended March 31, 2016, compared to $439,088,000 for the prior year’s three months, an increase of $174,229,000. Below are the details of the increase (decrease) by segment:

(Amounts in thousands)			Total		New York			Washington, DC			Other
Increase (decrease) due to:
Operating:
	Acquisitions, dispositions and other		$	3,922	$	5,179		$	(1,257)		$	-
	Development and redevelopment			284		(32)			88			228
	Non-reimbursable expenses, including bad debt
		reserves		736		44			907			(215)
	Hotel Pennsylvania			(1,162)		(1,162)			-			-
	Trade shows			(230)		-			-			(230)
	BMS expenses			(3,694)		(3,886)	⁽¹⁾		-			192
	Same store operations			2,000		4,503			(1,222)			(1,281)
				1,856		4,646			(1,484)			(1,306)

Depreciation and amortization:
	Acquisitions, dispositions and other			4,261		4,838			(577)			-
	Development and redevelopment			2,025		(242)			2,291			(24)
	Same store operations			12,549		9,670			378			2,501
				18,835		14,266			2,092			2,477

General and administrative:
	Mark-to-market of deferred compensation plan
		liability		(4,797)		-			-			(4,797)	⁽²⁾
	Same store operations			(4,991)		(2,077)	⁽³⁾		2,260	⁽⁴⁾		(5,174)	⁽⁵⁾
				(9,788)		(2,077)			2,260			(9,971)

Impairment loss and acquisition and transaction
	related costs			163,326		-			160,700	⁽⁶⁾		2,626

Total increase (decrease) in expenses			$	174,229	$	16,835		$	163,568		$	(6,174)


(1)	Primarily from the termination of a third party cleaning arrangement in 2015.
(2)	This decrease in expense is entirely offset by a corresponding decrease in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income, net” on our consolidated statements of income.
(3)	Results primarily from (i) the three months ended March 31, 2015 including a cumulative catch up of $986 from the acceleration of recognition of compensation expense related to the modification of the 2012-2014 Out-Performance Plans and (ii) higher capitalized leasing payroll in 2016.
(4)	Results primarily from higher capitalized payroll in 2015.
(5)	The three months ended March 31, 2015 includes a cumulative catch up of $4,542 from the acceleration of recognition of compensation expense related to the modification of the 2012-2014 Out-Performance Plans.
(6)	On March 15, 2016, we notified the servicer of the $678,000,000 mortgage loan on the Skyline properties in Virginia that cash flow will be insufficient to service the debt and pay other property related costs and expenses and that we were not willing to fund additional cash shortfalls. Accordingly, at our request, the loan has been transferred to the special servicer. Consequently, based on our shortened estimated holding period for the underlying assets, we concluded that the excess of carrying amount over our estimate of fair value was not recoverable and recognized a $160,700,000 non-cash impairment loss in the first quarter of 2016.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Loss from Partially Owned Entities

Summarized below are the components of loss from partially owned entities for the three months ended March 31, 2016 and 2015.

(Amounts in thousands)		Percentage
		Ownership at	For the Three Months Ended March 31,
		March 31, 2016	2016		2015
Our Share of Net (Loss) Income:
Partially owned office buildings⁽¹⁾		Various	$	(14,249)	$	(9,296)
Alexander's		32.4%		8,662		7,691
Pennsylvania Real Estate Investment Trust ("PREIT")		8.1%		(4,288)		-
Urban Edge Properties ("UE")		5.4%		1,085		584
India real estate ventures		4.1%-36.5%		(686)		(109)
Other investments⁽²⁾		Various		5,236		(1,613)
			$	(4,240)	$	(2,743)


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue, 512 West 22nd Street and others.
(2)	Includes interests in Independence Plaza, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street, Toys "R" Us, Inc. and others.

Income from Real Estate Fund Investments

Below are the components of the income from our real estate fund investments for the three months ended March 31, 2016 and 2015.


(Amounts in thousands)		For the Three Months Ended March 31,
		2016		2015
Net investment income		$	4,673	$	6,450
Net realized gain on exited investments			14,676		24,705
Previously recorded unrealized gain on exited investment			(14,254)		(23,279)
Net unrealized gains on held investments			6,189		16,213
Income from real estate fund investments			11,284		24,089
Less income attributable to noncontrolling interests			(5,973)		(13,539)
Income from real estate fund investments attributable to Vornado ⁽¹⁾		$	5,311	$	10,550


(1)	Excludes management, leasing and development fees of $760 and $704 for the three months ended March 31, 2016 and 2015, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Interest and Other Investment Income, net

Interest and other investment income, net was $3,518,000 for the three months ended March 31, 2016, compared to $10,792,000 for the prior year’s three months, a decrease of $7,274,000. This decrease resulted primarily from a $4,797,000 decrease in the value of investments in our deferred compensation plan (offset by a corresponding decrease in the liability for plan assets in general and administrative expenses) and a $2,076,000 decrease in interest on loans receivable as a result of lower outstanding loan balances.

Interest and Debt Expense

Interest and debt expense was $100,489,000 for the three months ended March 31, 2016, compared to $91,674,000 for the prior year’s three months, an increase of $8,815,000. This increase was primarily due to (i) $6,697,000 of higher interest expense from the financings of the St. Regis Retail, 150 West 34^th Street, 100 West 33^rd Street, and the unsecured term loan, and (ii) $2,039,000 of lower capitalized interest.

Net Gain on Disposition of Wholly Owned and Partially Owned Assets

For the three months ended March 31, 2016 and 2015, we recognized net gains from the sale of residential condominiums of $714,000 and $1,860,000, respectively.

Income Tax Expense

For the three months ended March 31, 2016 and 2015, we recognized income tax expense related to our taxable REIT subsidiaries of $2,831,000 and $971,000, respectively. The increase in expense resulted primarily from the three months ended March 31, 2015 including the reversal of $1,100,000 deferred tax liabilities related to our Washington, DC business.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Income from Discontinued Operations

We have reclassified the revenues and expenses of the UE portfolio and other retail properties that were sold or are currently held for sale to “income from discontinued operations” and the related assets and liabilities to “assets related to discontinued operations” and “liabilities related to discontinued operations” for all the periods presented in the accompanying financial statements. The table below sets forth the combined results of assets related to discontinued operations for the three months ended March 31, 2016 and 2015.


(Amounts in thousands)	For the Three Months Ended March 31,
	2016		2015
Total revenues	$	1,182	$	20,296
Total expenses		466		13,373
		716		6,923
Transaction related costs (primarily UE spin off)		-		(22,645)
Net gain on sale of lease position in Geary Street, CA		-		21,376
Net gains on sale of real estate		-		10,867
Impairment losses		-		(256)
Pretax income from discontinued operations		716		16,265
Income tax expense		-		(86)
Income from discontinued operations	$	716	$	16,179

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $9,678,000 for the three months ended March 31, 2016, compared to $15,882,000 for the prior year’s three months, a decrease of $6,204,000. This decrease resulted primarily from lower net income allocated to the noncontrolling interests, including noncontrolling interests of our real estate fund investments.

Net Loss (Income) Attributable to Noncontrolling Interests in the Operating Partnership

Net loss attributable to noncontrolling interests in the Operating Partnership was $7,487,000 for the three months ended March 31, 2016, compared to income of $5,287,000 for the prior year’s three months, a decrease in income of $12,774,000. This decrease resulted primarily from lower net income subject to allocation to unitholders.

Preferred Share Dividends

Preferred share dividends were $20,364,000 for the three months ended March 31, 2016, compared to $19,484,000 for the prior year’s three months, an increase of $880,000.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Same Store EBITDA

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

Below are reconciliations of EBITDA to same store EBITDA for each of our segments for the three months ended March 31, 2016, compared to three months ended March 31, 2015.


(Amounts in thousands)			New York			Washington, DC
EBITDA for the three months ended March 31, 2016			$	260,499		$	(84,385)
	Add-back:
		Non-property level overhead expenses included above		9,967			7,964
	Less EBITDA from:
		Acquisitions		(11,173)			-
		Dispositions		410			(34)
		Properties taken out-of-service for redevelopment		(5,860)			733
		Other non-operating income, net		1,563			160,535
Same store EBITDA for the three months ended March 31, 2016			$	255,406		$	84,813

EBITDA for the three months ended March 31, 2015			$	248,945		$	83,257
	Add-back:
		Non-property level overhead expenses included above		12,044			5,704
	Less EBITDA from:
		Acquisitions		(338)			-
		Dispositions		(3,346)			(1,982)
		Properties taken out-of-service for redevelopment		(5,009)			468
		Other non-operating income, net		(10,173)			(129)
Same store EBITDA for the three months ended March 31, 2015			$	242,123		$	87,318

Increase (decrease) in same store EBITDA -
	Three months ended March 31, 2016 vs. March 31, 2015		$	13,283	⁽¹⁾	$	(2,505)	⁽³⁾

% increase (decrease) in same store EBITDA				5.5%	⁽²⁾		(2.9%)


See notes on following page.

Results of Operations – Three Months Ended March 31, 2016 Compared to March 31, 2015 - continued

Notes to preceding tabular information:

New York:

(1) The $13,283,000 increase in New York same store EBITDA resulted primarily from increases in Office and Retail EBITDA of $9,740,000 and $3,209,000, respectively, partially offset by a decrease in Hotel Pennsylvania EBITDA of $1,346,000. The Office and Retail EBITDA increases resulted primarily from higher rents, including signage.

(2) Excluding Hotel Pennsylvania, same store EBITDA increased by 6.0%.

Washington, DC:

(3) The $2,505,000 decrease in Washington, DC same store EBITDA resulted primarily from lower rental revenue of $1,641,000 and higher net operating expenses of $512,000.

Reconciliation of Same Store EBITDA to Cash Basis Same Store EBITDA

(Amounts in thousands)		New York			Washington, DC
Same store EBITDA for the three months ended March 31, 2016		$	255,406		$	84,813
Less: Adjustments for straight line rents, amortization of acquired
	below-market leases, net, and other non-cash adjustments		(44,983)			(5,864)
Cash basis same store EBITDA for the three months ended
	March 31, 2016	$	210,423		$	78,949

Same store EBITDA for the three months ended March 31, 2015		$	242,123		$	87,318
Less: Adjustments for straight line rents, amortization of acquired
	below-market leases, net, and other non-cash adjustments		(34,015)			(5,841)
Cash basis same store EBITDA for the three months ended
	March 31, 2015	$	208,108		$	81,477

Increase (decrease) in cash basis same store EBITDA -
	Three months ended March 31, 2016 vs. March 31, 2015	$	2,315		$	(2,528)

% increase (decrease) in cash basis same store EBITDA			1.1%	⁽¹⁾		(3.1%)


(1)	Excluding Hotel Pennsylvania, same store EBITDA increased by 1.7% on a cash basis.

SUPPLEMENTAL INFORMATION

Reconciliation of Net Income to EBITDA for the Three Months Ended December 31, 2015

(Amounts in thousands)	New York		Washington, DC
Net income attributable to Vornado for the three months ended December 31, 2015	$	272,620	$	15,571
Interest and debt expense		64,347		19,973
Depreciation and amortization		105,131		43,101
Income tax expense		1,398		246
EBITDA for the three months ended December 31, 2015	$	443,496	$	78,891

Reconciliation of EBITDA to Same Store EBITDA – Three Months Ended March 31, 2016 Compared to December 31, 2015

(Amounts in thousands)			New York			Washington, DC
EBITDA for the three months ended March 31, 2016			$	260,499		$	(84,385)
	Add-back:
		Non-property level overhead expenses included above		9,967			7,964
	Less EBITDA from:
		Acquisitions		(1,040)			-
		Dispositions		410			(34)
		Properties taken out-of-service for redevelopment		(7,954)			733
		Other non-operating income, net		1,563			160,535
Same store EBITDA for the three months ended March 31, 2016			$	263,445		$	84,813

EBITDA for the three months ended December 31, 2015			$	443,496		$	78,891
	Add-back:
		Non-property level overhead expenses included above		6,788			7,553
	Less EBITDA from:
		Acquisitions		(239)			-
		Dispositions, including net gains on sale		(159,843)			41
		Properties taken out-of-service for redevelopment		(5,107)			830
		Other non-operating income, net		(13,761)			(2,451)
Same store EBITDA for the three months ended December 31, 2015			$	271,334		$	84,864

Decrease in same store EBITDA -
	Three months ended March 31, 2016 vs. December 31, 2015		$	(7,889)		$	(51)

% decrease in same store EBITDA				(2.9%)	⁽¹⁾		(0.1%)


(1)	Excluding Hotel Pennsylvania, same store EBITDA increased by 1.6%.

SUPPLEMENTAL INFORMATION – CONTINUED

Reconciliation of Same Store EBITDA to Cash Basis Same Store EBITDA – Three Months Ended March 31, 2016 Compared to December 31, 2015

(Amounts in thousands)		New York			Washington, DC
Same store EBITDA for the three months ended March 31, 2016		$	263,445		$	84,813
Less: Adjustments for straight line rents, amortization of acquired
	below-market leases, net, and other non-cash adjustments		(49,584)			(5,864)
Cash basis same store EBITDA for the three months ended
	March 31, 2016	$	213,861		$	78,949

Same store EBITDA for the three months ended December 31, 2015		$	271,334		$	84,864
Less: Adjustments for straight line rents, amortization of acquired
	below-market leases, net, and other non-cash adjustments		(54,605)			(6,851)
Cash basis same store EBITDA for the three months ended
	December 31, 2015	$	216,729		$	78,013

(Decrease) increase in cash basis same store EBITDA -
	Three months ended March 31, 2016 vs. December 31, 2015	$	(2,868)		$	936

% (decrease) increase in cash basis same store EBITDA			(1.3%)	⁽¹⁾		1.2%


(1)	Excluding Hotel Pennsylvania, same store EBITDA increased by 4.4% on a cash basis.

Liquidity and Capital Resources

Property rental income is our primary source of cash flow and is dependent upon the occupancy and rental rates of our properties. Our cash requirements include property operating expenses, capital improvements, tenant improvements, leasing commissions, dividends to shareholders, distributions to unitholders of the Operating Partnership, as well as acquisition and development costs. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, and our revolving credit facilities, proceeds from the issuance of common and preferred equity, and asset sales.

We anticipate that cash flow from continuing operations over the next twelve months will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to shareholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions may require funding from borrowings and/or equity offerings.

We may from time to time purchase or retire outstanding debt securities or redeem our equity securities. Such purchases, if any, will depend on prevailing market conditions, liquidity requirements and other factors. The amounts involved in connection with these transactions could be material to our consolidated financial statements.

Cash Flows for the Three Months Ended March 31, 2016

Our cash and cash equivalents were $1,673,566,000 at March 31, 2016, a $162,141,000 decrease from the balance at December 31, 2015. Our consolidated outstanding debt was $11,059,832,000 at March 31, 2016, a $31,178,000 decrease from the balance at December 31, 2015. As of March 31, 2016 and December 31, 2015, $0 and $550,000,000, respectively, was outstanding under our revolving credit facilities. During the remainder of 2016 and 2017, $708,603,000 and $363,842,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it.

Cash flows provided by operating activities of $276,645,000 was comprised of (i) net loss of $91,608,000, (ii) $264,378,000 of non-cash adjustments, which include depreciation and amortization expense, impairment losses, the effect of straight-lining of rental income, and loss from partially owned entities, (iii) distributions of income from partially owned entities of $29,860,000, (iv) return of capital from real estate fund investments of $14,676,000, and (v) the net change in operating assets and liabilities of $59,339,000.

Net cash used in investing activities of $241,598,000 was comprised of (i) $127,283,000 of development costs and construction in progress, (ii) $77,243,000 of additions to real estate, (iii) $63,188,000 of investments in partially owned entities, (iv) $1,348,000 of changes in restricted cash, and (v) $938,000 of acquisitions of real estate and other, partially offset by (vi) $25,524,000 of capital distributions from partially owned entities, (vii) $2,867,000 of proceeds from sales of real estate and related investments, and (viii) $11,000 of proceeds from sales and repayments of mortgage and mezzanine loans receivable and other.

Net cash used in financing activities of $197,188,000 was comprised of (i) $909,617,000 for the repayments of borrowings, (ii) $118,867,000 of dividends paid on common shares, (iii) $21,474,000 of distributions to noncontrolling interests, (iv) $20,364,000 of dividends paid on preferred shares, (v) $16,704,000 of debt issuance and other costs, and (vi) $185,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings and other, partially offset by (vii) $887,500,000 of proceeds from borrowings, and (viii) $2,523,000 of proceeds received from the exercise of employee share options.

Capital Expenditures

Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital expenditures include expenditures to maintain a property’s competitive position within the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases. Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property.

Liquidity and Capital Resources – continued

Capital Expenditures - continued

Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the three months ended March 31, 2016.


(Amounts in thousands)			Total		New York		Washington, DC		Other
Expenditures to maintain assets			$	14,046	$	9,443	$	2,255	$	2,348
Tenant improvements				29,792		27,216		2,219		357
Leasing commissions				15,023		13,962		1,061		-
Non-recurring capital expenditures				8,004		5,498		2,241		265
Total capital expenditures and leasing commissions (accrual basis)				66,865		56,119		7,776		2,970
Adjustments to reconcile to cash basis:
		Expenditures in the current year applicable to prior periods		50,564		39,550		9,533		1,481
		Expenditures to be made in future periods for the current period		(23,182)		(24,146)		(5,323)		6,287
Total capital expenditures and leasing commissions (cash basis)			$	94,247	$	71,523	$	11,986	$	10,738

Tenant improvements and leasing commissions:
	Per square foot per annum		$	6.16	$	6.99	$	3.01	$	n/a
	Percentage of initial rent			9.3%		7.5%		7.8%		n/a

Development and Redevelopment Expenditures

Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including capitalized interest, debt and operating costs until the property is substantially completed and ready for its intended use. Our development project budgets below include initial leasing costs, which are reflected as non-recurring capital expenditures in the table above.

We are constructing a residential condominium tower containing 397,000 salable square feet on our 220 Central Park South development site. The incremental development cost of this project is approximately $1.3 billion, of which $361,000,000 has been expended as of March 31, 2016.

We are developing The Bartlett, a 699-unit residential project in Pentagon City, which is expected to be completed in 2016. The project will include a 40,000 square foot Whole Foods Market at the base of the building. The incremental development cost of this project is approximately $250,000,000, of which $191,000,000 has been expended as of March 31, 2016.

We are developing a 173,000 square foot Class-A office building, located along the western edge of the High Line at 512 West 22nd Street in the West Chelsea submarket of Manhattan (55% owned). The incremental development cost of this project is approximately $130,000,000, of which our share is $72,000,000. As of March 31, 2016, $15,000,000 has been expended, of which our share is $8,000,000.

We are developing 61 Ninth Avenue, located on the Southwest corner of Ninth Avenue and 15th Street in the West Chelsea submarket of Manhattan. In February 2016, the venture purchased an adjacent five story loft building and air rights in exchange for a 10% common and preferred equity interest in the venture valued at $19,400,000, which reduced our ownership interest to 45.1% from 50.1%. The venture’s current plans are to construct an office building, with retail at the base, of approximately 167,000 square feet. The incremental development cost of this project is approximately $150,000,000, of which our share is $68,000,000. As of March 31, 2016, $15,000,000 has been expended, of which our share is $7,000,000.

We plan to demolish two adjacent Washington, DC office properties, 1726 M Street and 1150 17th Street in 2016 and replace them in the future with a new 335,000 square foot Class A office building, to be addressed 1700 M Street. The incremental development cost of the project is approximately $170,000,000.

We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan, including the Penn Plaza District, and in Washington, including Crystal City, Rosslyn and Pentagon City.

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

Liquidity and Capital Resources – continued

Development and Redevelopment Expenditures - continued

Below is a summary of development and redevelopment expenditures incurred in the three months ended March 31, 2016. These expenditures include interest of $9,071,000, payroll of $3,166,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $27,514,000, that were capitalized in connection with the development and redevelopment of these projects.


(Amounts in thousands)	Total		New York		Washington, DC		Other
220 Central Park South	$	55,291	$	-	$	-	$	55,291
The Bartlett		25,911		-		25,911		-
640 Fifth Avenue		9,755		9,755		-		-
2221 South Clark Street (residential conversion)		9,310		-		9,310		-
90 Park Avenue		6,635		6,635		-		-
Wayne Towne Center		3,777		-		-		3,777
Penn Plaza		2,744		2,744		-		-
330 West 34th Street		1,790		1,790		-		-
Other		12,070		2,406		4,829		4,835
	$	127,283	$	23,330	$	40,050	$	63,903

Cash Flows for the Three Months Ended March 31, 2015

Our cash and cash equivalents were $1,067,568,000 at March 31, 2015, a $130,909,000 decrease from the balance at December 31, 2014. The decrease is primarily due to cash flows from operating and investing activities, partially offset by cash flows from financing activities, as discussed below.

Cash flows provided by operating activities of $194,516,000 was comprised of (i) net income of $125,246,000, (ii) return of capital from real estate fund investments of $72,208,000, (iii) $55,668,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rental income, loss from partially owned entities and impairment losses on real estate, and (iv) distributions of income from partially owned entities of $15,874,000, partially offset by (v) the net change in operating assets and liabilities of $74,480,000 (including the acquisition of real estate fund investments of $95,022,000).

Net cash provided by investing activities of $149,871,000 was comprised of (i) $334,725,000 of proceeds from sales of real estate and related investments, (ii) $16,763,000 of proceeds from sales and repayments of mortgage and mezzanine loans receivable and other, (iii) $13,409,000 of capital distributions from partially owned entities, and (iv) $1,282,000 of changes in restricted cash, partially offset by (v) $88,052,000 of development costs and construction in progress, (vi) $54,466,000 of additions to real estate, (vii) $49,878,000 of acquisitions of real estate and other, and (viii) $23,912,000 of investments in partially owned entities.

Net cash used in financing activities of $475,296,000 was comprised of (i) $907,431,000 for the repayments of borrowings, (ii) $225,000,000 of distributions in connection with the spin-off of Urban Edge Properties, (iii) $118,447,000 of dividends paid on common shares, (iv) $60,287,000 of distributions to noncontrolling interests, (v) $19,484,000 of dividends paid on preferred shares, (vi) $5,076,000 of debt issuance and other costs, and (vii) $2,939,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings and other, partially offset by (viii) $800,000,000 of proceeds from borrowings, (ix) $51,350,000 of contributions from noncontrolling interests, and (x) $12,018,000 of proceeds received from the exercise of employee share options.

Liquidity and Capital Resources – continued

Capital Expenditures in the three months ended March 31, 2015

Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended in the three months ended March 31, 2015.


(Amounts in thousands)		Total		New York		Washington, DC		Other
Expenditures to maintain assets		$	20,935	$	12,810	$	1,986	$	6,139
Tenant improvements			50,900		9,762		37,011		4,127
Leasing commissions			8,281		3,744		3,748		789
Non-recurring capital expenditures			35,987		19,774		16,129		84
Total capital expenditures and leasing commissions (accrual basis)			116,103		46,090		58,874		11,139
Adjustments to reconcile to cash basis:
	Expenditures in the current year applicable to prior periods		40,209		26,220		6,924		7,065
	Expenditures to be made in future periods for the current period		(88,136)		(28,594)		(54,612)		(4,930)
Total capital expenditures and leasing commissions (cash basis)		$	68,176	$	43,716	$	11,186	$	13,274

Tenant improvements and leasing commissions:
	Per square foot per annum	$	8.04	$	8.95	$	7.60	$	n/a
	Percentage of initial rent		15.2%		10.8%		21.7%		n/a

Development and Redevelopment Expenditures in the three months ended March 31, 2015

Below is a summary of development and redevelopment expenditures incurred in the three months ended March 31, 2015. These expenditures include interest of $11,110,000, payroll of $1,026,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $29,134,000, that were capitalized in connection with the development and redevelopment of these projects.


(Amounts in thousands)	Total		New York		Washington, DC		Other
220 Central Park South	$	20,277	$	-	$	-	$	20,277
Springfield Town Center		14,478		-		-		14,478
The Bartlett		13,791		-		13,791		-
330 West 34th Street		11,902		11,902		-		-
Marriott Marquis Times Square - retail and signage		10,651		10,651		-		-
90 Park Avenue		5,173		5,173		-		-
Wayne Towne Center		2,362		-		-		2,362
Penn Plaza		1,163		1,163		-		-
2221 South Clark Street (residential conversion)		1,127		-		1,127		-
Other		7,128		2,254		4,628		246
	$	88,052	$	31,143	$	19,546	$	37,363

Liquidity and Capital Resources – continued

Other Commitments and Contingencies

As of March 31, 2016, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $80,000,000.

As of March 31, 2016, we have construction commitments aggregating approximately $810,700,000.

Funds From Operations (“FFO”)

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in Note 18 – Income per Share, in our consolidated financial statements on page 25 of this Quarterly Report on Form 10-Q.

FFO for the Three Months Ended March 31, 2016 and 2015

FFO attributable to common shareholders plus assumed conversions was $203,137,000, or $1.07 per diluted share for the three months ended March 31, 2016, compared to $220,084,000, or $1.16 per diluted share, for the prior year’s three months. Details of certain items that affect comparability are discussed in the financial results summary of our “Overview”.

(Amounts in thousands, except per share amounts)			For the Three Months Ended March 31,
			2016		2015
Reconciliation of our net (loss) income to FFO:
Net (loss) income attributable to Vornado			$	(93,799)	$	104,077
Depreciation and amortization of real property				134,121		118,256
Net gains on sale of real estate				-		(10,867)
Real estate impairment losses				160,700		256
Proportionate share of adjustments to equity in net loss of partially owned entities to arrive at FFO:
	Depreciation and amortization of real property			39,046		36,272
	Real estate impairment losses			4,353		-
Noncontrolling interests' share of above adjustments				(20,942)		(8,448)
FFO attributable to Vornado				223,479		239,546
Preferred share dividends				(20,364)		(19,484)
FFO attributable to common shareholders				203,115		220,062
Convertible preferred share dividends				22		22
FFO attributable to common shareholders plus assumed conversions			$	203,137	$	220,084

Reconciliation of Weighted Average Shares
	Weighted average common shares outstanding			188,658		187,999
	Effect of dilutive securities:
		Employee stock options and restricted share awards		964		1,337
		Convertible preferred shares		42		45
	Denominator for FFO per diluted share			189,664		189,381

FFO attributable to common shareholders plus assumed conversions per diluted share			$	1.07	$	1.16

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

(Amounts in thousands, except per share amounts)			2016					2015
					Weighted	Effect of 1%				Weighted
			March 31,		Average	Change In		December 31,		Average
			Balance		Interest Rate	Base Rates		Balance		Interest Rate
Consolidated debt:
	Variable rate		$	3,634,067	2.18%	$	36,341	$	3,995,704	2.00%
	Fixed rate			7,545,401	4.00%		-		7,206,634	4.21%
			$	11,179,468	3.41%		36,341	$	11,202,338	3.42%
Pro rata share of debt of non-consolidated
	entities (non-recourse):
	Variable rate – excluding Toys "R" Us, Inc.		$	673,469	2.13%		6,735	$	485,160	1.97%
	Variable rate – Toys "R" Us, Inc.			830,907	7.43%		8,309		1,164,893	6.61%
	Fixed rate (including $702,402 and $661,513
		of Toys "R" Us, Inc. debt in 2016 and 2015)		2,662,008	6.63%		-		2,782,025	6.37%
			$	4,166,384	6.06%		15,044	$	4,432,078	5.95%
Noncontrolling interests’ share of above							(3,186)
Total change in annual net income						$	48,199
Per share-diluted						$	0.25

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of March 31, 2016, we have an interest rate swap on a $416,000,000 mortgage loan on Two Penn Plaza that swapped the rate from LIBOR plus 1.65% (2.09% at March 31, 2016) to a fixed rate of 4.78% through March 2018 and an interest swap on a $375,000,000 mortgage loan on 888 Seventh Avenue that swapped the rate from LIBOR plus 1.60% (2.04% at March 31, 2016) to a fixed rate of 3.15% through December 2020.

In connection with the $700,000,000 refinancing of 770 Broadway, we entered into an interest rate swap from LIBOR plus 1.75% (2.19% at March 31, 2016) to a fixed rate of 2.56% through September 2020.

Fair Value of Debt

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of March 31, 2016, the estimated fair value of our consolidated debt was $10,967,000,000.

Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2016, such disclosure controls and procedures were effective.

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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

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: May 2, 2016	By:	/s/ Stephen W. Theriot
		Stephen W. Theriot, Chief Financial Officer (duly authorized officer and principal financial and accounting officer)

	EXHIBIT INDEX

Exhibit No.


	15.1	-	Letter regarding Unaudited Interim Financial Information

	31.1	-	Rule 13a-14 (a) Certification of the Chief Executive Officer

	31.2	-	Rule 13a-14 (a) Certification of the Chief Financial Officer

	32.1	-	Section 1350 Certification of the Chief Executive Officer

	32.2	-	Section 1350 Certification of the Chief Financial Officer

	101.INS	-	XBRL Instance Document

	101.SCH	-	XBRL Taxonomy Extension Schema

	101.CAL	-	XBRL Taxonomy Extension Calculation Linkbase

	101.DEF	-	XBRL Taxonomy Extension Definition Linkbase

	101.LAB	-	XBRL Taxonomy Extension Label Linkbase

	101.PRE	-	XBRL Taxonomy Extension Presentation Linkbase

VORNADO REALTY TRUST - Quarter Report: 2016 March (Form 10-Q)

2. Basis of Presentation

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

Revenues

PART II. OTHER INFORMATION

SIGNATURES