VORNADO REALTY TRUST Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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 10­Q. 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.

Currently, one of the most significant factors is the ongoing adverse effect of
the COVID-19 pandemic on our business, financial condition, results of
operations, cash flows, operating performance and the effect it has had and may
continue to have on our tenants, the global, national, regional and local
economies and financial markets and the real estate market in general. The
extent of the impact of the COVID-19 pandemic will continue to depend on future
developments, including vaccination rates among the population, the efficacy and
durability of vaccines against emerging variants, and governmental and tenant
responses thereto, which continue to be uncertain but the impact could be
material. Moreover, you are cautioned that the COVID-19 pandemic will heighten
many of the risks identified in "Item 1A. Risk Factors" in Part I of our Annual
Report on Form 10-K for the year ended December 31, 2021.

For further discussion of factors that could materially affect the outcome of
our forward-looking statements, see "Item 1A. Risk Factors" in Part I of our
Annual Report on Form 10-K for the year ended December 31, 2021. 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, 2022. 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, 2022 are not necessarily indicative of the operating results for
the full year. Certain prior year balances have been reclassified in order to
conform to the current year presentation.


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Insight


Vornado Realty Trust ("Vornado") is a fully-integrated real estate investment
trust ("REIT") and conducts its business through, and substantially all of its
interests in properties are held by, Vornado Realty L.P., a Delaware limited
partnership (the "Operating Partnership"). Vornado is the sole general partner
of and owned approximately 92.6% of the common limited partnership interest in
the Operating Partnership as of March 31, 2022. All references to the "Company,"
"we," "us" and "our" mean, collectively, Vornado, the Operating Partnership and
those subsidiaries consolidated by Vornado.

We compete with a large number of real estate investors, property owners and
developers, some of whom may be willing to accept lower returns on their
investments. Principal factors of competition are rents charged, sales prices,
attractiveness of location, the quality of the property and the breadth and the
quality of services provided. Our success depends upon, among other factors,
trends of the global, national, regional and local economies, the financial
condition and operating results of current and prospective tenants and
customers, availability and cost of capital, construction and renovation costs,
taxes, governmental regulations, legislation, population and employment
trends. See "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2021 for additional information regarding these
factors.

Our business has been adversely affected by the ongoing COVID-19 pandemic and
the preventive measures taken to curb the spread of the virus. The pandemic has
resulted in governments and other authorities implementing numerous measures to
try to contain the virus, such as travel bans and restrictions, quarantines,
shelter in place orders, and business closures. Some of the effects on us
include the following:

•While substantially all of the limitations and restrictions imposed on our
retail tenants during the onset of the pandemic have been lifted, economic
conditions and other factors, including a decline in Manhattan tourism since the
onset of the virus, continue to adversely affect the financial health of our
retail tenants.
•While our buildings are open, many of our office tenants are working remotely.
•We permanently closed the Hotel Pennsylvania on April 5, 2021 and plan to
develop an office tower on the site.
•Trade shows at theMART were cancelled beginning March of 2020 and resumed in
the third quarter of 2021 with generally lower attendance than pre-pandemic
levels.

The extent of the COVID-19 pandemic's effect on our operational and financial
performance will continue to depend on future developments, including
vaccination rates among the population, the efficacy and durability of vaccines
against emerging variants and governmental and tenant responses thereto, which
continue to be uncertain. Given the dynamic nature of the circumstances, it is
difficult to predict the long-term impact of the ongoing COVID-19 pandemic on
our business, financial condition, results of operations and cash flows but the
impact could be material.

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Overview – continued

Vornado Real Estate Trust

Quarter ended March 31, 2022 Summary of financial results


Net income attributable to common shareholders for the quarter ended March 31,
2022 was $26,478,000, or $0.14 per diluted share, compared to $4,083,000, or
$0.02 per diluted share, for the prior year's quarter. The quarters ended March
31, 2022 and 2021 include certain items that impact the comparability of period
to period net income attributable to common shareholders, which are listed in
the table below. The aggregate of these items, net of amounts attributable to
noncontrolling interests, decreased net income attributable to common
shareholders for the quarter ended March 31, 2022 by $5,204,000, or $0.02 per
diluted share, and $8,363,000, or $0.04 per diluted share, for the quarter ended
March 31, 2021.

Funds from operations ("FFO") attributable to common shareholders plus assumed
conversions for the quarter ended March 31, 2022 was $154,908,000, or $0.80 per
diluted share, compared to $118,407,000, or $0.62 per diluted share, for the
prior year's quarter. FFO attributable to common shareholders plus assumed
conversions for the quarters ended March 31, 2022 and 2021 include certain items
that impact the comparability of period to period FFO, which are listed in the
table below. The aggregate of these items, net of amounts attributable to
noncontrolling interests, increased FFO attributable to common shareholders plus
assumed conversions for the quarter ended March 31, 2022 by $2,595,000, or $0.01
per diluted share, and decreased FFO attributable to common shareholders plus
assumed conversions by $5,952,000, or $0.03 per diluted share, for the quarter
ended March 31, 2021.

The following table reconciles the difference between our net income
attributable to common shareholders and our net income attributable to common
shareholders, as adjusted:

(Amounts in thousands)                                          For the Three Months Ended March 31,
                                                                      2022                  2021

Certain items of expense (revenue) that impact net income attributable to common shareholders:
Hotel Pennsylvania loss

                                         $       

8,929 $8,990
Net gain after tax on the sale of 220 Central Park South (“220 CPS”) condominium units

                                                (5,412)                   -

Deferred tax liability on our investment in Farley Office and Retail (held through a taxable REIT subsidiary)

3,173                    -
Other                                                                  (1,100)                 (66)
                                                                        5,590                8,924
Noncontrolling interests' share of above adjustments                     (386)                (561)

Total of certain expense (revenue) items that affect net income attributable to common shareholders

                             $       

5,204 $8,363



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

(Amounts in thousands)                                         For the 

Three months completed March, 31st,

                                                                     2022                  2021
Certain (income) expense items that impact FFO attributable to
common shareholders plus assumed conversions:
After-tax net gain on sale of 220 CPS condominium units        $      (5,412)         $         -
Deferred tax liability on our investment in Farley Office and
Retail (held through a taxable REIT subsidiary)                        3,173                    -
Other                                                                   (549)               6,351
                                                                      (2,788)               6,351
Noncontrolling interests' share of above adjustments                     193                 (399)
Total of certain (income) expense items that impact FFO
attributable to common shareholders plus assumed conversions,
net                                                            $      (2,595)         $     5,952


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Overview – continued

Comparable store operating income (“NOI”) on a share basis

The percentage increase in same store NOI on a share and same store NOI on a cash basis of our New York segment, theMART and 555 California Street are below.


Three months ended March 31, 2022 compared to                                                                          555 California
March 31, 2021                                          Total               New York               theMART                 Street
Same store NOI at share % increase                         3.1  %                 2.5  %               10.0  %                   3.2  %

Same store NOI at share - cash basis %
increase                                                   5.8  %                 5.0  %               14.6  %                   5.3  %



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

Dispositions

220 CPS

During the three months ended March 31, 2022, we closed on the sale of one
condominium unit at 220 CPS for net proceeds of $15,095,000 resulting in a
financial statement net gain of $6,001,000 which is included in "net gains on
disposition of wholly owned and partially owned assets" on our consolidated
statements of income. In connection with this sale, $589,000 of income tax
expense was recognized on our consolidated statements of income. From inception
to March 31, 2022, we have closed on the sale of 107 units for net proceeds of
$3,021,991,000 resulting in financial statement net gains of $1,123,256,000.

SoHo Properties


On January 13, 2022, we sold two Manhattan retail properties located at 478-482
Broadway and 155 Spring Street for $84,500,000 and realized net proceeds of
$81,399,000. In connection with the sale, we recognized a net gain of $551,000
which is included in "net gains on disposition of wholly owned and partially
owned assets" on our consolidated statements of income.

central building (33-00 North Boulevard)


On April 27, 2022, we entered into an agreement to sell the Center Building, an
eight-story 498,000 square foot office building located at 33­00 Northern
Boulevard in Long Island City, New York, for $172,750,000. We expect to close
the sale in the third quarter of 2022 and recognize a financial statement gain
of approximately $15,000,000 and a tax gain of approximately $74,000,000. The
sale is subject to customary closing conditions.

Rental activity for the three months ended March 31, 2022


The leasing activity and related statistics 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.

•272,000 square feet of New York Office space (236,000 square feet at share) at
an initial rent of $81.07 per square foot and a weighted average lease term of
8.8 years. The changes in the GAAP and cash mark-to-market rent on the 152,000
square feet of second generation space were positive 6.5% and positive 7.2%,
respectively. Tenant improvements and leasing commissions were $12.88 per square
foot per annum, or 15.9% of initial rent.

•20,000 square feet of New York Retail space (all at share) at an initial rent
of $171.62 per square foot and a weighted average lease term of 14.1 years. The
20,000 square feet was first generation space. Tenant improvements and leasing
commissions were $14.01 per square foot per annum, or 8.2% of initial rent.

•149,000 square feet at theMART (all at share) at an initial rent of $49.79 per
square foot and a weighted average lease term of 8.2 years. The changes in the
GAAP and cash mark-to-market rent on the 133,000 square feet of second
generation space were negative 7.4% and negative 4.5%, respectively. Tenant
improvements and leasing commissions were $12.00 per square foot per annum, or
24.1% of initial rent.

•56,000 square feet at 555 California (39,000 square feet at share) at an
initial rent of $91.49 per square foot and a weighted average lease term of 6.8
years. The changes in the GAAP and cash mark-to-market rent on the 34,000 square
feet of second generation space were positive 56.4% and positive 19.8%,
respectively. Tenant improvements and leasing commissions were $12.50 per square
foot per annum, or 13.7% of initial rent.


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Overview – continued

Square footage (in use) and occupancy at March 31, 2022


(Square feet in thousands)                                                  

Square feet (in use)

                                                Number of                Total                        Our
                                               Properties              Portfolio                     Share                Occupancy %
New York:
Office                                               32        (1)       19,462                       16,767                       92.1  %
Retail (includes retail properties that are
in the base of our office properties)                58        (1)        2,213                        1,781                       80.4  %
Residential - 1,983 units(2)                          7        (1)        1,510                          777                       96.4  % (2)
Alexander's                                           6                   2,218                          719                       96.2  % (2)

                                                                         25,403                       20,044                       91.2  %
Other:
theMART                                               4                   3,635                        3,626                       88.9  %
555 California Street                                 3                   1,818                        1,273                       94.2  %
Other                                                11                   2,489                        1,154                       92.9  %
                                                                          7,942                        6,053

Total square feet as of March 31, 2022                                   33,345                       26,097


____________________
See notes below.

Square footage (in use) and occupancy at December 31, 2021


(Square feet in thousands)                                                  

Square feet (in use)

                                                 Number of                Total                       Our
                                                 properties             Portfolio                    Share               Occupancy %
New York:
Office                                                32        (1)      19,442                      16,757                      92.2  %
Retail (includes retail properties that are
in the base of our office properties)                 60        (1)       2,267                       1,825                      80.7  %
Residential - 1,986 units(2)                           8        (1)       1,518                         785                      96.4  % (2)
Alexander's                                            6                  2,218                         719                      95.6  % (2)

                                                                         25,445                      20,086                      91.3  %
Other:
theMART                                                4                  3,692                       3,683                      88.9  %
555 California Street                                  3                  1,818                       1,273                      93.8  %
Other                                                 11                  2,489                       1,154                      92.8  %
                                                                          7,999                       6,110

Total square feet as of December 31, 2021                                33,444                      26,196


____________________

(1)Reflects the Office, Retail and Residential space within our 75 and 77 total
New York properties as of March 31, 2022 and December 31, 2021, respectively.
(2)The Alexander Apartment Tower (312 units) is reflected in Residential unit
count and occupancy.

Critical Accounting Estimates
A summary of our critical accounting policies and estimates used in the
preparation of our consolidated financial statements is included in Part II,
Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations in our Annual Report on Form 10-K for the year ended December 31,
2021. For the three months ended March 31, 2022, there were no material changes
to these policies.

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

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NOI At Share by Segment for the Three Months Ended March 31, 2022 and 2021
NOI at share represents total revenues less operating expenses including our
share of partially owned entities. NOI at share - cash basis represents NOI at
share adjusted to exclude straight-line rental income and expense, amortization
of acquired below and above market leases, net and other non-cash adjustments.
We consider NOI at share - cash basis to be the primary non-GAAP financial
measure for making decisions and assessing the unlevered performance of our
segments as it relates to the total return on assets as opposed to the levered
return on equity. As properties are bought and sold based on NOI at share - cash
basis, we utilize this measure to make investment decisions as well as to
compare the performance of our assets to that of our peers. NOI at share and NOI
at share - cash basis should not be considered alternatives to net income or
cash flow from operations and may not be comparable to similarly titled measures
employed by other companies.

Below is a summary of NOI share and NOI share – cash basis by segment for the three months ended March 31, 2022 and 2021.

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