AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 26, 2002

                                                        REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                   ----------
                              VORNADO REALTY TRUST

    (EXACT NAME OF REGISTRANT AS
     SPECIFIED IN ITS CHARTER)
               MARYLAND                                  22-1657560
    (STATE OR OTHER JURISDICTION OF         (IRS EMPLOYER IDENTIFICATION NUMBER)
    INCORPORATION OR ORGANIZATION)
          888 SEVENTH AVENUE                           JOSEPH MACNOW
       NEW YORK, NEW YORK 10019                      888 SEVENTH AVENUE
            (212) 894-7000                        NEW YORK, NEW YORK 10019
  (ADDRESS INCLUDING ZIP CODE, AND                    (212) 894-7000
  TELEPHONE NUMBER, INCLUDING AREA            (ADDRESS INCLUDING ZIP CODE, AND
   CODE, OF REGISTRANT'S EXECUTIVE            TELEPHONE NUMBER, INCLUDING AREA
              OFFICES)                           CODE, OF AGENT FOR SERVICE)

                                   COPIES TO:
                             WILLIAM G. FARRAR, ESQ.
                               SULLIVAN & CROMWELL
                                125 BROAD STREET
                            NEW YORK, NEW YORK 10004

          Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement as
determined by market conditions.

          If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
          If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
          If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
          If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
          If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

                         CALCULATION OF REGISTRATION FEE



                                                                   Proposed maximum      Proposed maximum
               Title of shares                    Amount to be      offering price          aggregate             Amount of
              to be registered                     registered        per share (2)      offering price (2)     registration fee
----------------------------------------------   --------------   ------------------   --------------------   -------------------
                                                                                                      
Common shares of beneficial interest, par
value $0.04 per share(1)                              9,518,576        $36.60              $348,379,882           $32,051


(1)  This Registration Statement registers the common shares of beneficial
     interest, par value $0.04 per share, of Vornado Realty Trust ("Vornado")
     issuable if Vornado elects to issue common shares to holders of up to
     9,518,576 class A units of limited partnership interest in Vornado Realty
     L.P. (the "Operating Partnership") upon the tender of such units for
     redemption. The units were issued by the Operating Partnership to partners
     of Charles E. Smith Commercial Realty L.P. other than affiliates of Vornado
     upon the acquisition by the Operating Partnership on January 1, 2002 of the
     remaining 66% interest in Charles E. Smith Commercial Realty L.P. that
     Vornado did not previously own. This Registration Statement also relates to
     such additional common shares as may be issued as a result of certain
     adjustments including, without limitation, share dividends and share
     splits.
(2)  Estimated solely for purposes of calculating the registration fee in
     accordance with Rule 457(c) based on the average of the high and low
     reported sales prices on the New York Stock Exchange on December 19, 2002.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.



                              SUBJECT TO COMPLETION

                 PRELIMINARY PROSPECTUS DATED DECEMBER 26, 2002

                              VORNADO REALTY TRUST

                             9,518,576 COMMON SHARES

          We are a fully-integrated real estate investment trust. We may issue
up to 9,518,576 common shares to holders of up to 9,518,576 class A units of
limited partnership interest in Vornado Realty L.P. upon tender of those units
for redemption. Vornado Realty L.P. is the operating partnership through which
we own our assets and operate our business.

          The units that may be redeemed for common shares were issued to
partners of Charles E. Smith Commercial Realty L.P. other than our affiliates in
connection with the acquisition on January 1, 2002 of the remaining 66% interest
in Charles E. Smith Commercial Realty L.P. that we did not previously own.

          We are required to register the 9,518,576 common shares pursuant to a
registration rights agreement with the holders of those units. We will acquire
units from the redeeming unit holders in exchange for any common shares that we
issue. We have registered the issuance of the common shares to permit their
holders to sell them in the open market or otherwise, but the registration of
the shares does not necessarily mean that any holders will elect to redeem their
units. Also, upon any redemption, we may elect to pay cash for the units
tendered rather than issue common shares. Although we will incur expenses in
connection with the registration of the 9,518,576 common shares, we will not
receive any cash proceeds upon their issuance.

          The common shares are listed on the New York Stock Exchange under the
symbol "VNO."

          In order to maintain our qualification as a real estate investment
trust for federal income tax purposes and for other purposes, no person
generally may own more than 6.7% of the outstanding common shares. Shares owned
in excess of this limit will be deemed "excess shares" under the declaration of
trust. The holder of any excess shares will lose some ownership rights with
respect to these shares, and we will have the right to purchase them from the
holder.

          SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION ABOUT FACTORS
RELEVANT TO AN INVESTMENT IN THE COMMON SHARES.

          Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities or passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.

          The date of this prospectus is December  , 2002.

The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and it is not the
solicitation of an offer to buy these securities in any state where the offer or
sale is not permitted.



                                TABLE OF CONTENTS



                                                                                 PAGE
                                                                                 ----
                                                                                
Where You Can Find More Information.................................................1
Cautionary Statement Regarding Forward-Looking Statements...........................2
Risk Factors........................................................................4
Vornado and The Operating Partnership..............................................19
Use of Proceeds....................................................................20
Redemption of Units................................................................20
Description of Common Shares.......................................................26
Federal Income Tax Considerations..................................................31
Description of the Units and The Operating Partnership.............................44
Comparison of Ownership of Units and Common Shares.................................59
Plan of Distribution...............................................................70
Experts............................................................................70
Validity of The Common Shares......................................................70




          YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED
ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN
OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THESE
DOCUMENTS.

          When we say "we," "our," "us" or "Vornado," we mean Vornado Realty
Trust and its consolidated subsidiaries, except where we make it clear that we
mean only the parent company. When we say the "operating partnership," we mean
Vornado Realty L.P. When we say "you," without any further specification, we
mean the holders of units that were issued in connection with our acquisition on
January 1, 2002 of the remaining 66% interest in Charles E. Smith Commercial
Realty L.P. that we did not previously own other than our affiliates.

                       WHERE YOU CAN FIND MORE INFORMATION

          We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room.

          This prospectus is part of a registration statement on Form S-3 filed
by Vornado with the SEC under the Securities Act. As permitted by the rules and
regulations of the SEC, this prospectus omits some of the information contained
in the registration statement. You should read the registration statement and
related exhibits for further information about Vornado and the common shares
offered by this prospectus. Statements in this prospectus about the provisions
of any document filed as an exhibit to the registration statement or otherwise
filed with the SEC are only summaries, and in each instance you should read the
document so filed for complete information about its provisions. Each statement
in this prospectus about the provisions of any document filed with the SEC is
qualified in its entirety by reference to the document.

          The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and, where applicable, supersede this
information.

          We incorporate by reference into this prospectus the following
documents or information filed with the SEC:

          (1)  Annual report of Vornado Realty Trust on Form 10-K for the fiscal
               year ended December 31, 2001 (File No. 001-11954);

          (2)  Quarterly report of Vornado Realty Trust on Form 10-Q for the
               fiscal quarter ended March 31, 2002 (File No. 001-11954);

          (3)  Quarterly report of Vornado Realty Trust on Form 10-Q for the
               fiscal quarter ended June 30, 2002 (File No. 001-11954);

          (4)  Quarterly report of Vornado Realty Trust on Form 10-Q for the
               fiscal quarter ended September 30, 2002 (File No. 001-11954), as
               amended by Form 10-Q/A filed with the SEC on December 24, 2002;

          (5)  Current report on Form 8-K of Vornado Realty Trust dated January
               1, 2002 and filed with the SEC on January 16, 2002 (File No.
               001-11954);

                                        1


          (6)  Current report on Form 8-K of Vornado Realty Trust dated February
               28, 2002 and filed with the SEC on March 1, 2002 (File No.
               001-11954);

          (7)  Current report on Form 8-K/A of Vornado Realty Trust dated
               January 1, 2002 and filed with the SEC on March 18, 2002 (File
               No. 001-11954);

          (8)  Current report on Form 8-K of Vornado Realty Trust dated August
               20, 2002 and filed with the SEC on August 22, 2002 (File No.
               001-11954);

          (9)  The description of Vornado's common shares contained in Vornado's
               registration statement on Form 8-B (File No. 001-11954), filed
               with the SEC on May 10, 1993; and

          (10) All documents filed by Vornado Realty Trust under Sections 13(a),
               13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
               the date of this prospectus and until we sell all of the
               securities or after the date of the initial registration
               statement and before effectiveness of the registration statement,
               except that the information referred to in Item 402(a)(8) of
               Regulation S-K of the SEC is not incorporated by reference into
               this prospectus.

          You may request a copy of these filings, excluding exhibits to these
filings unless they are specifically incorporated by reference into these
filings, at no cost, by writing or telephoning us at the following address:
Vornado Realty Trust, 210 Route 4 East, Paramus, New Jersey 07652, telephone
(201) 587-1000, Attn: Secretary.

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

          This prospectus, including the documents incorporated by reference in
it, contains forward-looking statements with respect to our financial condition,
results of operations and business. You can find many of these statements by
looking for words such as "believes," "expects," "anticipates," "estimates,"
"intends," "plans" or similar expressions in this prospectus or the documents
incorporated by reference.

          These forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that may cause actual results to differ
materially from those contemplated by the forward-looking statements include,
among others, the following possibilities:

          -    national, regional and local economic conditions;

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

          -    our ability to secure adequate insurance;

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

          -    competition from other available space;

          -    whether tenants consider a property attractive;

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

          -    whether we are able to pass some or all of any increased
               operating costs we experience through to our tenants;

                                        2


          -    how well we manage our properties;

          -    increased interest expense;

          -    decreases in market rental rates;

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

          -    changes in taxation or zoning laws;

          -    government regulations;

          -    our failure to continue to qualify as a real estate investment
               trust;

          -    availability of financing on acceptable terms or at all;

          -    potential liability under environmental or other laws or
               regulations; and

          -    general competitive factors.

          Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. Our future results, financial
condition and business may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these items
are beyond our ability to control or predict. 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 prospectus or, if applicable, the date of the applicable 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 after the date
of this prospectus or to reflect the occurrence of unanticipated events. For
more information on the uncertainty of forward-looking statements, see "Risk
Factors" in this prospectus.

                                        3


                                  RISK FACTORS

          An investment in our common shares involves risks. You should
carefully consider, among other factors, the matters described below.

IF YOU REDEEM YOUR UNITS, YOU MAY INCUR ADVERSE TAX CONSEQUENCES AND THE NATURE
OF YOUR INVESTMENT WILL CHANGE.

YOU SHOULD CAREFULLY CONSIDER THE TAX CONSEQUENCES OF REDEEMING YOUR UNITS.

          The exercise of your right to require the redemption of your units
will be treated for tax purposes as a sale of your units. This sale will be
fully taxable to you, and you will be treated as realizing for tax purposes an
amount equal to the sum of the cash or the value of the common shares received
in the exchange plus the amount of the operating partnership liabilities
considered allocable to the redeemed units at the time of the redemption,
including the operating partnership's share of the liabilities of certain
entities in which the operating partnership owns an interest. Depending upon
your particular circumstances, it is possible that the amount of gain
recognized, or even the tax liability resulting from that gain, could exceed the
amount of cash and the value of other property, e.g., the common shares,
received upon the disposition. See "Redemption of Units--Tax Consequences of
Redemption" for more information on these tax consequences.

THE NATURE OF YOUR INVESTMENT WILL CHANGE UPON A REDEMPTION OF YOUR UNITS.

          Unless we elect to assume and perform the operating partnership's
obligation with respect to redeeming your units, you will receive cash on the
specified redemption date from the operating partnership in an amount equal to
the market value of the units to be redeemed. For class A units, which are the
kind of units that you hold, the specified redemption date is generally the
tenth business day after we receive your notice of redemption if our common
shares are publicly traded. In lieu of the operating partnership's acquiring the
units for cash, we have the right, except as described below if the common
shares are not publicly traded, to elect to acquire the units on the specified
redemption date directly from you, in exchange for either cash or common shares,
and upon acquiring the units, we will become the owner of your units. See
"Redemption of Units" for more information about our right to acquire your units
for either cash or common shares when you redeem them. If you receive cash, you
will no longer have any interest in the operating partnership or Vornado, will
not benefit from any subsequent increases in the price of the common shares and
will not receive any future distributions from the operating partnership or
Vornado, unless you currently own or acquire in the future additional common
shares or units. If you receive common shares, you will become a shareholder of
Vornado rather than a holder of units in the operating partnership. Although an
investment in common shares is substantially equivalent to an investment in
units in the operating partnership, there are some differences between ownership
of units and ownership of common shares. These differences, some of which may be
material to you, are discussed in "Comparison of Ownership of Units and Common
Shares."

REAL ESTATE INVESTMENTS' VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.

THE VALUE OF REAL ESTATE FLUCTUATES DEPENDING ON CONDITIONS IN THE GENERAL
ECONOMY AND THE REAL ESTATE BUSINESS. THESE CONDITIONS MAY ALSO LIMIT OUR
REVENUES AND AVAILABLE CASH.

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

          -    national, regional and local economic conditions;

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

                                        4


          -    our ability to secure adequate insurance;

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

          -    competition from other available space;

          -    whether tenants consider a property attractive;

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

          -    whether we are able to pass some or all of any increased
               operating costs we experience through to tenants;

          -    how well we manage our properties;

          -    increased interest expense;

          -    decreases in market rental rates;

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

          -    changes in taxation or zoning laws;

          -    government regulations;

          -    availability of financing on acceptable terms or at all;

          -    potential liability under environmental or other laws or
               regulations; and

          -    general competitive factors.

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

WE DEPEND ON LEASING SPACE TO TENANTS ON ECONOMICALLY FAVORABLE TERMS AND
COLLECTING RENT FROM OUR TENANTS, WHO MAY NOT BE ABLE TO PAY.

          Our financial results depend on leasing space in our properties to
tenants on economically favorable terms. In addition, because substantially all
of our income comes from rentals of real property, our income and funds
available for distribution to our shareholders will decrease if a significant
number of our tenants cannot pay their rent. If a tenant does not pay its rent,
we might not be able to enforce our rights as landlord without delays and might
incur substantial legal costs. For information regarding the bankruptcy of our
tenants, see "--Bankruptcy of tenants may decrease our revenues and available
cash" below.

                                        5


BANKRUPTCY OF TENANTS MAY DECREASE OUR REVENUES AND AVAILABLE CASH.

          A number of companies, including some of our tenants, have declared
bankruptcy in recent years, and other tenants may declare bankruptcy or become
insolvent in the future. If a major tenant declares bankruptcy or becomes
insolvent, the rental property where it leases space may have lower revenues and
operational difficulties, and, in the case of our shopping centers, we may have
difficulty leasing the remainder of the affected property. Our leases generally
do not contain restrictions designed to ensure the creditworthiness of our
tenants. As a result, the bankruptcy or insolvency of a major tenant could
result in a lower level of funds from operations available for distribution to
our shareholders.

          U.S. Airways Group Inc. leases 340,000 square feet from us for its
headquarters in Washington, D.C. U.S. Air has been adversely affected by the
downturn in air travel as a result of the terrorist attacks and economic decline
and declared bankruptcy in August 2002. We cannot predict whether U.S. Air will
reject all or part of its headquarters lease.

          The risk that some of our tenants may declare bankruptcy is higher
because of the September 11, 2001 terrorist attacks and the resulting decline in
the economy. This is particularly true for our tenants that are dependent on the
air or travel industries as a primary source of revenue.

SOME OF OUR POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE.

          We carry comprehensive liability and all risk property insurance
(fire, flood, extended coverage and rental loss insurance) with respect to our
properties. However, there are some types of losses, including lease and other
contract claims, as well as claims related to nuclear reactions, certain other
contaminants and pollutants and, most recently, terrorist acts, that generally
are not insured. If an uninsured loss or a loss in excess of insured limits
occurs, we could lose all or a portion of the capital we have invested in a
property, as well as the anticipated future revenue from the property. If this
were to happen, we might remain obligated for any mortgage debt or other
financial obligations related to the property and may be liable to third parties
for damages.

          The insurance payouts that have been made, and that are continuing to
be made, as a result of the terrorist attacks have reduced significantly the
insurance industry's reserves, and this reduction may continue as additional
claims are made. Moreover, the demand for higher levels of insurance coverage
has increased, and this rising demand is expected to continue as a result of
these attacks. For these reasons and others related to the general market for
insurance products, insurance premiums have increased significantly with respect
to policies that we have renewed since September 11, 2001, and we expect that
insurance premiums will continue to increase for any policy, upon its renewal,
that we have not renewed since September 11, 2001. These increases have had an
adverse impact on our cash flow, and, if the current condition of the insurance
market persists, we expect this adverse impact to continue with respect to any
policy, upon its renewal, that we have not renewed since September 11, 2001.
Furthermore, we have not been able to purchase policies with coverage limits and
deductibles similar to those that were available before the attacks, and it is
likely that we will not be able to purchase those kinds of policies in the
future.

          Real property insurance policies put into effect before September 11,
2001 do not expressly exclude coverage from hostile acts, except for acts of
war. Since September 11, 2001, insurance companies have been excluding terrorist
acts from coverage in all risk policies. We have generally been unable to obtain
all risk insurance which includes coverage for terrorist acts for policies we
have renewed since September 11, 2001, and we may not be able to obtain coverage
for terrorist attacks under any policy we purchase in the future. However, we
have obtained separate coverage in limited amounts for terrorist acts when an
all risk insurance policy covering our properties has excluded terrorist acts
from coverage upon the renewal of the policy. Therefore, we are at risk for
financial loss in excess of these limited amounts for terrorist acts as defined
by the policies, which loss could be material.

                                        6


          Our debt instruments, consisting of mortgage loans secured by our
properties, which are generally non-recourse to us, our senior unsecured notes
due 2007, and our revolving credit agreement, contain customary covenants
requiring us to maintain insurance. The lenders under these instruments may take
the position that an exclusion from all risk insurance coverage for losses due
to terrorist acts is a breach of these debt instruments that allows the lenders
to declare an event of default and accelerate repayment of debt. In addition, if
lenders insist on coverage for these risks, it could adversely affect our
ability to finance or refinance our properties and to expand our portfolio.

          On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was
signed into law. Under this new legistlation, through 2004 (with a possible
extension through 2005), insurers licensed or admitted in the United States, as
well as other specified insurers, must offer coverage in their commercial
property and casualty policies (including existing policies) for losses
resulting from defined "acts of terrorism." As of the date of enactment of this
law, existing terrorism exclusion clauses are void to the extent they exclude
losses that would otherwise be "insured losses" under the legislation. Subject
to certain caps on reimbursement and other limitations, this legislation will
establish a federal program to reimburse insurers for a portion of losses so
insured. It is unclear what effect, if any, this legislation will have on our
ability to obtain insurance coverage for terrorist attacks in the future and
what impact it may have on any premiums paid by us in connection with coverage
for terrorist attacks. However, as required by the legislation, it is expected
that all insurers writing our property and casualty insurance will advise us by
February 24, 2003 of the cost of participation in the federal program, and
provide a 30 day period for us to opt in or out of the federal program.

WE MAY ACQUIRE OR DEVELOP NEW PROPERTIES, AND THIS MAY CREATE RISKS.

          We may acquire or develop properties or acquire other real estate
companies when we believe that an acquisition or development is consistent with
our business strategies. We may not, however, succeed in consummating desired
acquisitions or in completing developments on time or within our budget. We also
might not succeed in leasing newly developed or acquired properties at rents
sufficient to cover their costs of acquisition or development and operations.

          We have experienced rapid growth in recent years, increasing our total
assets from approximately $565,000,000 at December 31, 1996 to approximately
$9,066,000,000 at September 30, 2002. This growth included the acquisition of
Charles E. Smith Commercial Realty L.P. on January 1, 2002, which increased our
total assets as of that date by $2,201,000,000, of which $1,453,000,000 is
attributable to the acquisition of assets and $748,000,000 is attributable to
Charles E. Smith Commercial Realty L.P. becoming a wholly owned subsidiary of
the operating partnership and therefore being consolidated rather than accounted
for under the equity method. We may not be able to manage any growth effectively
or to maintain a similar rate of growth in the future, and our failure to do so
may have a material adverse effect on our financial condition and results of
operations.

          In addition, if persons selling properties to us wish to defer the
payment of taxes on the sales proceeds, we are likely to pay them in units of
the operating partnership. In transactions of this kind, we may also agree not
to sell the acquired properties or reduce the mortgage indebtedness on them for
significant periods of time. If we borrow funds or assume indebtedness to
acquire or develop properties, indebtedness of the operating partnership, as a
percentage of our asset value or market capitalization, might increase. If this
happens, the increased leverage may impair our ability to take actions that
would otherwise be in our best interests or the best interests of our security
holders.

          For additional information about our leverage, see "-- Our
Organizational and Financial Structure Gives Rise to Operational and Financial
Risks -- We have indebtedness, and this indebtedness may increase" below.

                                        7


IT MAY BE DIFFICULT TO BUY AND SELL REAL ESTATE QUICKLY, AND TRANSFER
RESTRICTIONS APPLY TO SOME OF OUR MORTGAGED PROPERTIES.

          Equity real estate investments are relatively difficult to buy and
sell quickly. We therefore have limited ability to vary our portfolio promptly
in response to changes in economic or other conditions. Some of our properties
are mortgaged to secure payment of indebtedness. If we were unable to meet our
mortgage payments, the lender could foreclose on the properties and we could
incur a loss. In addition, if we wish to dispose of one or more of the mortgaged
properties, we might not be able to obtain release of the lien on the mortgaged
property. If a lender forecloses on a mortgaged property or if a mortgage lien
prevents us from selling a property, our funds available for distribution to our
shareholders could decline. For information relating to the mortgages on our
properties, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" in our annual report
on Form 10-K for the year ended December 31, 2001 and quarterly report on Form
10-Q for the period ended September 30, 2002 and the notes to our consolidated
financial statements in the same reports.

A SIGNIFICANT PROPORTION OF OUR PROPERTIES ARE IN THE NEW YORK CITY/NEW JERSEY
AND WASHINGTON, D.C. METROPOLITAN AREAS AND ARE AFFECTED BY THE ECONOMIC CYCLES
AND RISKS INHERENT TO THOSE REGIONS.

          For the nine months ended September 30, 2002, 72.6% of our earnings
before interest expense, taxes, depreciation and amortization, extraordinary or
non-recurring items, gains or losses on sales of real estate, the effect of
straight-lining of property rentals for rent escalations and minority interest
came from properties located in New Jersey and the New York City and Washington,
D.C. metropolitan areas. We refer to earnings before interest expense, taxes,
depreciation and amortization, extraordinary or non-recurring items, gains or
losses on sales of real estate, the effect of straight-lining of property
rentals for rent escalations and minority interest as "EBITDA." Our management
considers EBITDA a supplemental measure for making decisions and assessing the
performance of our segments. EBITDA should not be considered a substitute for
net income as a measure of operating performance or a substitute for cash flow
as a measure of liquidity. EBITDA may not be comparable to similarly titled
measures employed by other companies.

          In addition, we may continue to concentrate a significant portion of
our future acquisitions in New Jersey and the New York City and Washington, D.C.
metropolitan areas. Like other real estate markets, the real estate markets in
these areas have experienced economic downturns in the past, and we cannot
predict how the current economic conditions will impact these markets in both
the short and long term. Further declines in the economy or a decline in the
real estate markets in these areas could hurt our financial performance and the
value of our properties. The factors affecting economic conditions in these
regions include:

          -    business layoffs or downsizing;

          -    industry slowdowns;

          -    relocations of businesses;

          -    changing demographics;

          -    increased telecommuting and use of alternative work places;

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

          -    infrastructure quality; and

                                        8


          -    any oversupply of or reduced demand for real estate.

          It is impossible for us to assess the future effects of the current
uncertain trends in the economic and investment climates of the New York
City/New Jersey and Washington, D.C. regions, and more generally of the United
States, on the real estate markets in these areas. If these conditions persist,
they may adversely affect our businesses and future profitability.

ON JANUARY 1, 2002, WE COMPLETED THE ACQUISITION OF THE 66% INTEREST IN CHARLES
E. SMITH COMMERCIAL REALTY L.P. THAT WE DID NOT PREVIOUSLY OWN. THE TERMS OF THE
MERGER RESTRICT OUR ABILITY TO SELL OR OTHERWISE DISPOSE OF, OR TO FINANCE OR
REFINANCE, THE PROPERTIES FORMERLY OWNED BY CHARLES E. SMITH COMMERCIAL REALTY
L.P., WHICH COULD RESULT IN OUR INABILITY TO SELL THESE PROPERTIES AT AN
OPPORTUNE TIME AND INCREASED COSTS TO US.

          We have agreed to restrictions on our ability to sell, finance,
refinance and, in some instances, pay down existing financing on the Charles E.
Smith Commercial Realty L.P. properties for a period of up to 20 years, under a
tax reporting and protection agreement that we entered into at the closing of
the merger. This agreement prohibits us from taking these actions unless the
operating partnership also pays the contributing partners based on their tax
liabilities as a result of the sale. These arrangements may significantly reduce
our ability to sell, finance or repay indebtedness secured by the subject
properties or assets.

          In addition, we are restricted from selling or otherwise transferring
or disposing of certain properties located in the Crystal City area of
Arlington, Virginia or an interest in our division that manages the majority of
our office properties in the Washington, D.C. metropolitan area, which we refer
to as the "Smith Division," without the consent of Robert H. Smith and Robert P.
Kogod, each of whom was a significant unit holder of Charles E. Smith Commercial
Realty L.P., for a period of 12 years with respect to certain properties located
in the Crystal City area of Arlington, Virginia or six years with respect to an
interest in the Smith Division. These restrictions, which currently cover
approximately 13.0 million square feet of space, could result in our inability
to sell these properties or an interest in the Smith Division at an opportune
time and increased costs to us.

WE MAY INCUR COSTS TO COMPLY WITH ENVIRONMENTAL LAWS.

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

REAL ESTATE IS A COMPETITIVE BUSINESS.

                                        9


          Our business segments -- Office, Retail, Merchandise Mart Properties,
Temperature Controlled Logistics, and Other -- operate in highly competitive
environments. We have a large concentration of properties in the New York City
metropolitan area and in the Washington, D.C. and Northern Virginia area. We
compete with a large number of real estate property owners and developers.
Principal factors of competition are rent charged, attractiveness of location
and quality and breadth of services provided. Our success depends upon, among
other factors, the trends of the national and local economies, the financial
condition and operating results of current and prospective tenants and
customers, the availability and cost of capital, construction and renovation
costs, taxes, governmental regulations, legislation and population trends.

THE TERRORIST ATTACKS OF SEPTEMBER 11, 2001 IN NEW YORK CITY AND THE WASHINGTON,
D.C. AREA MAY ADVERSELY AFFECT THE VALUE OF OUR PROPERTIES AND OUR ABILITY TO
GENERATE CASH FLOW.

THERE MAY BE A DECREASE IN DEMAND FOR SPACE IN LARGE METROPOLITAN AREAS THAT ARE
CONSIDERED AT RISK FOR FUTURE TERRORIST ATTACKS, AND THIS DECREASE MAY REDUCE
OUR REVENUES FROM PROPERTY RENTALS.

          We have significant investments in large metropolitan areas, including
the New York/New Jersey, Washington, D.C. and Chicago metropolitan areas. In the
aftermath of the terrorist attacks, tenants in these areas may choose to
relocate their business to less populated, lower-profile areas of the United
States that are not as likely to be targets of future terrorist activity. This
in turn would trigger a decrease in the demand for space in these areas, which
could increase vacancies in our properties and force us to lease our properties
on less favorable terms. As a result, the value of our properties and the level
of our revenues could decline materially.

OUR INVESTMENT IN HOTEL PENNSYLVANIA IS DEPENDENT ON THE TRAVEL INDUSTRY, AND
THAT INVESTMENT HAS BEEN AND MAY CONTINUE TO BE IMPACTED SEVERELY BY THE
TERRORIST ATTACKS AND THE CURRENT ECONOMIC DOWNTURN.

          Our investment in Hotel Pennsylvania is directly dependent on the
travel industry generally and the willingness of people to visit New York City
in particular. Since September 11, 2001, there has been a substantial decline in
travel and tourism to New York City. Accordingly, there has been a significant
reduction in occupancy at Hotel Pennsylvania. As a result, revenues generated by
this investment have been impacted severely by that decline, and we expect this
impact on revenues to continue.

ALL OF OUR TEMPERATURE CONTROLLED LOGISTICS WAREHOUSES ARE LEASED TO ONE TENANT,
AND THAT TENANT IS EXPERIENCING OPERATING DIFFICULTIES.

          The operating partnership indirectly owns a 60% interest in
partnerships, which we refer to as the "Vornado/Crescent Partnerships," that own
89 warehouse facilities nationwide with an aggregate of approximately 445
million cubic feet of refrigerated, frozen and dry storage space. The
Vornado/Crescent Partnerships sold all of the non-real estate assets
encompassing the operations of the temperature controlled business to a new
partnership named AmeriCold Logistics owned 60% by Vornado Operating Company,
which we refer to as "Vornado Operating," and 40% by Crescent Operating Inc.
AmeriCold Logistics leases the underlying temperature controlled warehouses used
in this business from the Vornado/Crescent Partnerships, which continue to own
the real estate. During 2001, AmeriCold Logistics generated approximately 8% of
our EBITDA on a pro forma basis as if the acquisition of Charles E. Smith
Commercial Realty L.P. occurred on January 1, 2001. During the nine months ended
September 30, 2002, AmeriCold Logistic generated approximately 7.4% of our
EBITDA. On February 22, 2001, the Vornado/Crescent Partnerships restructured the
AmeriCold Logistics leases to, among other things, (a) reduce 2001's contractual
rent to $146,000,000, (b) reduce 2002's contractual rent to $150,000,000 plus
contingent rent in certain circumstances, (c) increase the Vornado/Crescent
Partnerships' share of annual maintenance capital expenditures by $4,500,000 to
$9,500,000 effective January 1, 2000 and (d) allow AmeriCold Logistics to defer
rent to December 31, 2003 to the extent cash is not available, as defined in the
leases, to pay the rent. Based on our policy of recognizing rental income when
earned and collection is

                                       10


assured or cash is received, we did not recognize $15,281,000 and $8,606,000 of
the rent that was due in the years ended December 31, 2001 and 2000 and
$12,361,000 of rent that was due in the nine months ended September 30, 2002. On
December 31, 2001 the Vornado/Crescent Partnerships released the tenant from its
obligation to pay $39,812,000 of deferred rent, of which our share was
$23,887,000. This amount equals the rent that we did not recognize as income in
2000 and 2001 and accordingly had no profit and loss effect on us.

          To the extent that the operations of AmeriCold Logistics may affect
its ability to pay rent, including percentage rent due under the leases, we
indirectly bear the risks associated with AmeriCold Logistics' cold storage
business. The cold storage business is extremely competitive. Factors affecting
AmeriCold Logistics' ability to compete include, among others, (a) warehouse
locations, (b) customer mix and (c) availability, quality and price of
additional services.

WE MAY NOT BE ABLE TO OBTAIN CAPITAL TO MAKE INVESTMENTS.

          We depend primarily on external financing to fund the growth of our
business. This is because one of the requirements of the Internal Revenue Code
of 1986, as amended, for a REIT is that it distribute 90% of its net taxable
income, excluding net capital gains, to its shareholders. Our access to debt or
equity financing depends on banks' willingness to lend and on conditions in the
capital markets. We and other companies in the real estate industry have
experienced limited availability of bank loans and capital markets financing
from time to time. Although we believe that we will be able to finance any
investments we wish to make in the foreseeable future, financing other than what
we already have available might not be available on acceptable terms.

          For information about our available sources of funds, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in our annual report on Form 10-K
for the year ended December 31, 2001 and our quarterly report on Form 10-Q for
the quarterly period ended September 30, 2002 and the notes to the consolidated
financial statements in the same reports.

OUR OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE TO
CONFLICTS OF INTEREST.

STEVEN ROTH AND INTERSTATE PROPERTIES MAY EXERCISE SUBSTANTIAL INFLUENCE OVER
US. THEY AND SOME OF OUR OTHER TRUSTEES AND OFFICERS HAVE INTERESTS OR POSITIONS
IN OTHER ENTITIES THAT MAY COMPETE WITH US.

          As of September 30, 2002, Interstate Properties, a New Jersey general
partnership, and its partners owned approximately 15.7% of the common shares of
Vornado and approximately 27.5% of the common stock of Alexander's, Inc. and
beneficially owned approximately 7.9% of the common stock of Vornado Operating
(approximately 17.0% assuming redemption of 447,017 units of Vornado Operating
L.P., the operating subsidiary of Vornado Operating, that are redeemable for
cash or, at Vornado Operating's election, common stock of Vornado Operating).
Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners
of Interstate Properties. Mr. Roth is the Chairman of the Board and Chief
Executive Officer of Vornado, the managing general partner of Interstate
Properties, the Chief Executive Officer and a director of Alexander's and the
Chairman of the Board and Chief Executive Officer of Vornado Operating. Mr.
Wight is a trustee of Vornado and is also a director of both Alexander's and
Vornado Operating. Mr. Mandelbaum is a trustee of Vornado and is also a director
of Alexander's.

          As of September 30, 2002, Vornado owned 33.1% of the outstanding
common stock of Alexander's. Alexander's is a REIT engaged in leasing, managing,
developing and redeveloping properties, focusing primarily on the locations
where its department stores operated before they ceased operations in 1992.
Alexander's has six properties, which are located in the New York City
metropolitan area. Mr. Roth and Michael D. Fascitelli, the President and a
trustee of Vornado, are directors of Alexander's. Messrs. Mandelbaum,
Richard R. West and Wight are trustees of Vornado and are also directors of
Alexander's.

                                       11


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

          Vornado currently manages and leases the real estate assets of
Interstate Properties under a management agreement for which Vornado receives a
quarterly fee equal to 4% of base rent and percentage rent and certain other
commissions. The management agreement has a term of one year and is
automatically renewable unless terminated by either of the parties on 60 days'
notice at the end of the term. Vornado earned $1,655,000 of management fees
under the management agreement for the year ended December 31, 2001 and
$1,023,000 for the nine months ended September 30, 2002. Because Vornado and
Interstate Properties are controlled by the same persons, as described above,
the terms of the management agreement and any future agreements between us and
Interstate Properties may not be comparable to those we could have negotiated
with an unaffiliated third party.

VORNADO ENGAGES IN TRANSACTIONS WITH VORNADO OPERATING ON TERMS THAT MAY OR MAY
NOT BE COMPARABLE TO THOSE WE COULD NEGOTIATE WITH UNAFFILIATED THIRD PARTIES.

          In October 1998, Vornado Operating was spun off from Vornado in order
to own assets that Vornado could not itself own and conduct activities that
Vornado could not itself conduct.

          In addition to being trustees of Vornado, Messrs. Roth, Fascitelli,
West and Wight are directors of Vornado Operating. Mr. Roth is also Chairman of
the Board and Chief Executive Officer of Vornado Operating, Mr. Fascitelli is
also President of Vornado Operating, and certain other members of Vornado's
senior management hold corresponding positions with Vornado Operating.

          The operating partnership entered into a $75,000,000 unsecured
revolving credit facility with Vornado Operating that expires on December 31,
2004. Borrowings under the revolving credit agreement bear interest at LIBOR
plus 3%. The operating partnership receives an annual commitment fee equal to 1%
on the average daily unused portion of the facility. Vornado Operating is not
required to pay any amortization under the revolving credit agreement during its
term. The revolving credit agreement prohibits Vornado Operating from incurring
indebtedness to third parties, other than certain purchase money debt and
certain other exceptions, and prohibits Vornado Operating from paying dividends.
As of September 30, 2002, $32,836,000 was outstanding under the revolving credit
agreement.

          The operating partnership and Vornado Operating are parties to an
agreement under which, among other things, (a) the operating partnership will
offer Vornado Operating, under certain circumstances, an opportunity to become
the lessee of certain real property owned now or in the future by the operating
partnership under mutually satisfactory lease terms and (b) Vornado Operating
will not make any real estate investment or other investments known as
REIT-qualified investments unless it first offers the operating partnership the
opportunity to make the investment and the operating partnership has rejected
that opportunity. Under this agreement, the operating partnership provides
Vornado Operating with administrative, corporate, accounting, financial,
insurance, legal, tax, data processing, human resources and operational
services. For these services, Vornado Operating compensates the operating
partnership in an amount determined in good faith by the operating partnership
as the amount an unaffiliated third party

                                       12


would charge Vornado Operating for comparable services and reimburses the
operating partnership for certain costs incurred and paid to third parties on
behalf of Vornado Operating. Under this agreement, compensation for these
services was approximately $330,000, $330,000 and $371,000 for the years ended
December 31, 1999, 2000 and 2001 and $248,000 for the nine months ended
September 30, 2002. Vornado Operating and the operating partnership each have
the right to terminate this agreement if the other party is in material default
of the agreement or upon 90 days' written notice to the other party at any time
after December 31, 2003. In addition, the operating partnership has the right to
terminate this agreement upon a change in control of Vornado Operating.

          Vornado Operating's restated certificate of incorporation specifies
that one of its corporate purposes is to perform this agreement and, for so long
as the agreement remains in effect, prohibits Vornado Operating from making any
real estate investment or other REIT-qualified investment without first offering
the opportunity to the operating partnership in the manner specified in this
agreement.

          We and Vornado Operating may enter into additional transactions in the
future. Because we and Vornado Operating share common senior management and
because a majority of our trustees also constitute the majority of the directors
of Vornado Operating, the terms of the foregoing agreements and any future
agreements between us and Vornado Operating may not be comparable to those we
could have negotiated with an unaffiliated third party.

THERE MAY BE CONFLICTS OF INTEREST BETWEEN VORNADO AND ALEXANDER'S.

          As of September 30, 2002, Vornado owned 33.1% of the outstanding
common stock of Alexander's. Alexander's is a REIT engaged in leasing, managing,
developing and redeveloping properties, focusing primarily on the locations
where its department stores operated before they ceased operations in 1992.
Alexander's has six properties. Interstate Properties, which is further
described above, owned an additional 27.5% of the outstanding common stock of
Alexander's as of September 30, 2002. Mr. Roth, Chairman of the Board and Chief
Executive Officer of Vornado, is Chief Executive Officer and a director of
Alexander's, and Mr. Fascitelli, President and a trustee of Vornado, is
President and a director of Alexander's. Messrs. Mandelbaum, West and Wight,
trustees of Vornado, are also directors of Alexander's. Alexander's common stock
is listed on the New York Stock Exchange under the symbol "ALX."

          At September 30, 2002, the operating partnership had loans receivable
from Alexander's of $119,000,000 at an interest rate of 12.48%. These loans
mature on the earlier of January 3, 2006 or the date that Alexander's Lexington
Avenue construction loan is repaid in full. The operating partnership manages,
develops and leases the Alexander's properties under management and development
agreements and leasing agreements under which the operating partnership receives
annual fees from Alexander's. These agreements have a one-year term expiring in
March of each year, except that the Lexington Avenue management and development
agreements have a term lasting until substantial completion of development of
the Lexington Avenue property, and are all automatically renewable. Because
Vornado and Alexander's share common senior management and because a majority of
the trustees of Vornado also constitute the majority of the directors of
Alexander's, the terms of the foregoing agreements and any future agreements
between us and Alexander's may not be comparable to those we could have
negotiated with an unaffiliated third party.

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

AN AFFILIATED COMPANY PROVIDES CLEANING AND SECURITY SERVICES TO SOME OF OUR
OFFICE PROPERTIES UNDER CONTRACTS THAT WERE NOT NEGOTIATED AT ARM'S LENGTH.

                                       13


          David Greenbaum, the President of our New York Office Division, and
certain other investors own an entity that provides cleaning and related
services and security services to our office properties in the New York City
metropolitan area and New Jersey. The contracts under which these services are
provided were not negotiated at arm's length.

ARCHSTONE-SMITH TRUST PROVIDES SERVICES TO US UNDER AGREEMENTS THAT WERE NOT
NEGOTIATED AT ARM'S LENGTH.

          We have agreements with the Charles E. Smith Residential Division of
Archstone-Smith Trust under which we receive engineering and tenant build-out
services. In addition, we lease office space to Archstone-Smith Trust and share
the cost of certain office-related services with it. These agreements were
entered into by Charles E. Smith Commercial Realty in 1997, before our January
1, 2002 acquisition of Charles E. Smith Commercial Realty, at a time when Mr.
Smith and Mr. Kogod were in control of both Charles E. Smith Commercial and
Charles E. Smith Residential. Mr. Smith and Mr. Kogod, who became members of our
board of trustees on January 1, 2002, are also trustees and shareholders of
Archstone-Smith Trust.

OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND
FINANCIAL RISKS.

WE DEPEND ON OUR DIRECT AND INDIRECT SUBSIDIARIES' DIVIDENDS AND DISTRIBUTIONS,
AND THESE SUBSIDIARIES' CREDITORS AND PREFERRED SECURITY HOLDERS ARE ENTITLED TO
PAYMENT OF AMOUNTS PAYABLE TO THEM BY THE SUBSIDIARIES BEFORE THE SUBSIDIARIES
MAY PAY ANY DIVIDENDS OR DISTRIBUTIONS TO US.

          Substantially all of our assets consist of our partnership interests
in the operating partnership. The operating partnership holds substantially all
of its properties and assets through subsidiaries. The operating partnership
therefore depends for substantially all of its cash flow on cash distributions
to it by its subsidiaries, and we in turn depend for substantially all of our
cash flow on cash distributions to us by the operating partnership. The
creditors of each of our direct and indirect subsidiaries are entitled to
payment of that subsidiary's obligations to them, when due and payable, before
distributions may be made by that subsidiary to its equity holders. Thus, the
operating partnership's ability to make distributions to holders of units
depends on its subsidiaries' ability first to satisfy their obligations to their
creditors and then to make distributions to the operating partnership. Likewise,
our ability to pay dividends to holders of common and preferred shares depends
on the operating partnership's ability first to satisfy its obligations to its
creditors and make distributions payable to holders of preferred units and then
to make distributions to us.

          Furthermore, the holders of preferred units of the operating
partnership are entitled to receive preferred distributions before payment of
distributions to holders of common units of the operating partnership, including
us. Thus, our ability to pay dividends to holders of our common shares depends
on the operating partnership's ability first to satisfy its obligations to its
creditors and make distributions payable to holders of preferred units and then
to make distributions to us. There are currently 17 series of preferred units of
the operating partnership not held by us that have preference over our common
shares. The total liquidation value of these 17 series of preferred units is
approximately $1,495,300,000.

          In addition, we may participate in any distribution of the assets of
any of our direct or indirect subsidiaries upon the liquidation, reorganization
or insolvency of the subsidiary, and consequently our shareholders may
participate in those assets, only after the claims of the creditors, including
trade creditors, and preferred security holders, if any, of the subsidiary are
satisfied.

WE HAVE INDEBTEDNESS, AND THIS INDEBTEDNESS MAY INCREASE.

          As of September 30, 2002, we had approximately $4.9 billion in total
debt outstanding, including the debt assumed in connection with the acquisition
of Charles E. Smith Commercial Realty L.P. In addition, as of September 30,
2002, our ratio of total debt to total enterprise value was 43%. When we say

                                       14


"enterprise value" in the preceding sentence, we mean market equity value of
Vornado Realty Trust plus debt less cash. In the future, we may incur additional
debt, and thus increase our ratio of total debt to total enterprise value, to
finance acquisitions or property developments. We may review and modify our debt
level from time to time without notice to or any vote of our shareholders.

LOSS OF OUR KEY PERSONNEL COULD HARM OUR OPERATIONS.

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

WE MIGHT FAIL TO QUALIFY OR REMAIN QUALIFIED AS A REIT.

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

          If, with respect to any taxable year, Vornado fails to maintain its
qualification as a REIT, it could not deduct distributions to shareholders in
computing its taxable income and would have to pay federal income tax on its
taxable income at regular corporate rates. The federal income tax payable would
include any applicable alternative minimum tax. If Vornado had to pay federal
income tax, the amount of money available to distribute to shareholders would be
reduced for the year or years involved, and Vornado would no longer be required
to distribute money to shareholders. In addition, Vornado would also be
disqualified from treatment as a REIT for the four taxable years following the
year during which qualification was lost, unless Vornado was entitled to relief
under the relevant statutory provisions. Although Vornado currently intends to
operate in a manner designed to allow it to qualify as a REIT, future economic,
market, legal, tax or other considerations may cause it to revoke the REIT
election.

VORNADO'S CHARTER DOCUMENTS AND APPLICABLE LAW MAY HINDER ANY ATTEMPT TO ACQUIRE
VORNADO.

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

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

                                       15


          Vornado's declaration of trust authorizes the Board of Trustees:

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

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

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

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

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

          Under the Maryland General Corporation Law, as amended, which we refer
to as the "MGCL," as applicable to real estate investment trusts, certain
"business combinations," including certain mergers, consolidations, share
exchanges and asset transfers and certain issuances and reclassifications of
equity securities, between a Maryland real estate investment trust and any
person who beneficially owns ten percent or more of the voting power of the
trust's shares or an affiliate or an associate, as defined in the MGCL, of the
trust who, at any time within the two-year period before the date in question,
was the beneficial owner of ten percent or more of the voting power of the then
outstanding voting shares of beneficial interest of the trust, which we refer to
as an "interested shareholder," or an affiliate of the interested shareholder
are prohibited for five years after the most recent date on which the interested
shareholder becomes an interested shareholder. After that five-year period, any
business combination of these kinds must be recommended by the board of trustees
of the trust and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding shares of beneficial
interest of the trust and (b) two-thirds of the votes entitled to be cast by
holders of voting shares of the trust other than shares held by the interested
shareholder with whom, or with whose affiliate, the business combination is to
be effected, unless, among other conditions, the trust's common shareholders
receive a minimum price, as defined in the MGCL, for their shares and the
consideration is received in cash or in the same form as previously paid by the
interested shareholder for its common shares. The provisions of the MGCL do not
apply, however, to business combinations that are approved or exempted by the
board of trustees of the trust before the interested shareholder becomes an
interested shareholder, and a person is not an interested shareholder if the
board of trustees approved in advance the transaction by which the person
otherwise would have become an interested shareholder. In approving a
transaction, the board may provide that its approval is subject to compliance,
at or after the time of approval, with any terms and conditions determined by
the board. The Vornado board has adopted a resolution exempting any business
combination between any trustee or officer of Vornado, or their affiliates, and
Vornado. As a result, the trustees and officers of Vornado and their affiliates
may be able to enter into business combinations with Vornado which may not be in
the best interest of shareholders. With respect to business combinations with
other persons, the business combination provisions of the MGCL may have the
effect of delaying, deferring or preventing a change in control of Vornado or
other transaction that might involve a premium price or otherwise be in the best
interest of the shareholders. The business combination statute may discourage
others from trying to acquire control of Vornado and increase the difficulty of
consummating any offer.

THE NUMBER OF SHARES OF VORNADO AND THE MARKET FOR THOSE SHARES GIVE RISE TO
VARIOUS RISKS.

                                       16


VORNADO HAS MANY SHARES AVAILABLE FOR FUTURE SALE, WHICH COULD HURT THE MARKET
PRICE OF OUR SHARES.

          As of November 30, 2002, 30,921,603 Vornado common shares were
reserved for issuance upon redemption of operating partnership units. Some of
these shares may be sold in the public market after registration under the
Securities Act under registration rights agreements between Vornado and some
holders of units of the operating partnership. These shares may also be sold in
the public market under Rule 144 under the Securities Act or other available
exemptions from registration. In addition, we have reserved a number of common
shares for issuance under our employee benefit plans, and these common shares
will be available for sale from time to time. We have granted options to
purchase additional common shares to some of our executive officers and
employees. We cannot predict the effect that future sales of our common shares,
or the perception that sales of common shares could occur, will have on the
market prices of the common shares.

CHANGES IN MARKET CONDITIONS COULD HURT THE MARKET PRICE OF OUR SHARES.

          The value of our shares depends on various market conditions, which
may change from time to time. Among the market conditions that may affect the
value of our shares are the following:

          -    the extent of institutional investor interest in Vornado;

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

          -    our financial condition and performance; and

          -    general financial market conditions.

          In addition, the stock market in recent years has experienced extreme
price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of companies.

INCREASED MARKET INTEREST RATES MAY HURT THE VALUE OF OUR SHARES.

          We believe that investors consider the distribution rate on REIT
shares, expressed as a percentage of the price of the shares, relative to market
interest rates as an important factor in deciding whether to buy or sell the
shares. If market interest rates go up, prospective purchasers of REIT shares
may expect a higher distribution rate. Higher interest rates would not, however,
result in more funds for us to distribute and, in fact, would likely increase
our borrowing costs and might decrease our funds available for distribution.
Thus, higher market interest rates could cause the market price of our shares to
decline.

WE HAVE NOT OBTAINED THE CONSENT OF ARTHUR ANDERSEN LLP FOR THE USE OF ITS
PREVIOUSLY ISSUED AUDIT REPORT REGARDING THE FINANCIAL STATEMENTS OF CHARLES E.
SMITH COMMERCIAL REALTY L.P., AND THAT MAY LIMIT YOUR ABILITY TO RECOVER FROM
ARTHUR ANDERSEN LLP WITH RESPECT TO THAT AUDIT. OUR ABILITY TO RECOVER FROM THAT
FIRM FOR THAT AUDIT MAY ALSO BE LIMITED.

          The consolidated balance sheet as of December 31, 2001 and the
consolidated statements of income, changes in partners' deficit, and cash flows
for the year ended December 31, 2001 of Charles E. Smith Commercial Realty L.P.
and subsidiaries that are incorporated by reference in this prospectus are
accompanied by an audit report of Arthur Andersen LLP. We were unable, however,
to obtain that firm's consent to the incorporation by reference of that audit
report in this prospectus and the registration statement of which this
prospectus is part because of the events arising out of Arthur Andersen LLP's
conviction in June 2002 on a federal charge of obstruction of justice relating
to the audits of Enron Corp. As a result, investors will not be able to recover
against Arthur Andersen LLP under Section 11(a)(4) of the

                                       17


Securities Act of 1933, as amended, if applicable, with respect to the audit
report with respect to Charles E. Smith Commercial Realty L.P. and may have any
recovery limited as a result of the lack of consent. Moreover, the events
arising out of Arthur Andersen LLP's conviction may adversely affect the ability
of Arthur Andersen LLP to satisfy any successful claims against it, including
any claims brought by us, arising from its audit of Charles E. Smith Commercial
Realty L.P.'s financial statements.

                                       18


                      VORNADO AND THE OPERATING PARTNERSHIP

          Vornado is a fully-integrated real estate investment trust organized
under the laws of Maryland. Vornado conducts its business through, and
substantially all of its interests in properties are held by, the operating
partnership. Vornado is the sole general partner of, and owned approximately 79%
of the common limited partnership interest in, the operating partnership as of
December 9, 2002.

          The operating partnership currently owns directly or indirectly:

          -    Office Properties:

               -    all or portions of 73 office properties in the New York City
                    metropolitan area (primarily Manhattan) and in the
                    Washington, D.C. and Northern Virginia area aggregating
                    approximately 27.7 million square feet;

          -    Retail Properties:

               -    56 shopping center properties in six states and Puerto Rico
                    aggregating approximately 12.8 million square feet,
                    including 1.4 million square feet built by tenants on land
                    leased from Vornado;

          -    Merchandise Mart Properties:

               -    the Merchandise Mart Properties portfolio containing
                    approximately 8.6 million square feet, including the 3.4
                    million square foot Merchandise Mart in Chicago;

          -    Temperature Controlled Logistics:

               -    a 60% interest in partnerships that own 88 warehouse
                    facilities nationwide with an aggregate of approximately 442
                    million cubic feet of refrigerated space leased to AmeriCold
                    Logistics;

          -    Other Real Estate Investments:

               -    33.1% of the outstanding common stock of Alexander's, Inc.;

               -    the Hotel Pennsylvania in New York City consisting of a
                    hotel portion containing 1,000,000 square feet with 1,700
                    rooms and a commercial portion containing 400,000 square
                    feet of retail and office space;

               -    a 21.1% interest in The Newkirk Master Limited Partnership,
                    which owns office, retail and industrial properties and
                    various debt interests in those properties;

               -    eight dry warehouse/industrial properties in New Jersey
                    containing approximately 2.0 million square feet; and

               -    other real estate investments.

          The principal executive offices of Vornado and the operating
partnership are located at 888 Seventh Avenue, New York, New York 10019;
telephone (212) 894-7000.

                                       19


                                 USE OF PROCEEDS

          Vornado will not receive any cash proceeds from the issuance of the
shares offered by this prospectus but will acquire units in the operating
partnership in exchange for any shares that Vornado may issue to a redeeming
unit holder.

                               REDEMPTION OF UNITS

          At any time after January 1, 2003, you have the right to have your
units redeemed in whole or in part by the operating partnership for cash equal
to the fair market value, at the time of redemption, of one common share of
Vornado for each unit redeemed. We have the right to issue you one common share
for each unit tendered instead of paying the cash redemption amount. You may
redeem units only in compliance with the securities laws, the Second Amended and
Restated Agreement of Limited Partnership of the operating partnership, dated as
of October 20, 1997, as amended, and the declaration of trust's limits on
ownership of common shares. We refer to the Second Amended and Restated
Agreement of Limited Partnership of the operating partnership, as amended, as
the "partnership agreement."

          You may exercise the right to redeem your units by providing a notice
of redemption, substantially in the form attached as an exhibit to the
partnership agreement, to the operating partnership, with a copy to Vornado. You
may also be required to furnish the operating partnership and Vornado with
certain other certificates and forms. The partnership agreement establishes some
limitations on your right to redeem units. Unless we elect to assume and perform
the operating partnership's obligation with respect to the redemption, as
described below, you will receive cash on the specified redemption date from the
operating partnership in an amount equal to the market value of the units to be
redeemed. The "specified redemption date" with respect to your units will be
either (a) in the case of a redemption that qualifies as a "block transfer" or
that satisfies the "lack of actual trading" safe harbor from publicly traded
partnership status, both as defined in the Treasury regulations under the
Internal Revenue Code, the tenth business day after we receive your notice of
redemption if our common shares are publicly traded or the thirtieth business
day after we receive your notice of redemption if our common shares are not
publicly traded, or (b) in the case of a redemption that does not qualify as a
block transfer or satisfy the lack of actual trading safe harbor, a date up to
60 days after we receive your notice of redemption as determined by us in our
sole discretion.

          Furthermore, redemptions of class A units by the operating partnership
pursuant to the redemption right discussed above, together with other transfers
and redemptions of operating partnership units (other than certain of the
redemptions or transfers qualifying as "private transfers" under the regulations
under Section 7704 of the Internal Revenue Code), are limited in any one taxable
year to 10% of the interests in capital or profits not held by Vornado or
certain of its affiliates, and Vornado has the right and currently intends to
refuse to permit certain redemptions and other transfers of operating
partnership units that, when aggregated with prior redemptions and transfers,
would exceed this limit.

          When we say "business day," we mean a day that is not a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to close. The market value of a unit for the
purpose of redemption will be equal to the average of the closing trading prices
of a Vornado common share on the NYSE for the ten trading days before the day on
which we received the notice of redemption or, if that day is not a business
day, the first business day after that day.

          Instead of the operating partnership's acquiring the units for cash,
we have the right to acquire the units on the specified redemption date directly
from you, in exchange for either the market value of the units in cash or for
common shares. However, we do not have this right if the common shares are not
publicly traded, as described below. If we acquire the units, we will become
their owner. In either case, acquisition of the units by Vornado will be treated
as a sale of the units by you to Vornado for federal income tax purposes. See
"--Tax Consequences of Redemption--Tax Treatment of Redemption of Units" for
information about the tax consequences of redeeming units to the redeeming unit
holder.

                                       20


          If we determine to acquire the units in exchange for common shares,
the total number of common shares to be paid to you will be equal to the product
of the number of units times the conversion factor. See "Description of the
Units and the Operating Partnership--Sales of Assets" for further information
about the conversion factor, which is 1.0 as of the date of this prospectus.
Vornado currently anticipates that it generally will elect to acquire directly
units tendered for redemption and to issue common shares in exchange for the
units rather than pay cash, but we will decide whether to pay cash or issue
common shares upon redemption of units when units are tendered for redemption.

          When you redeem units, your right to receive distributions on the
units so redeemed or exchanged will cease, unless the record date for a
distribution was a date before the specified redemption date. You must redeem at
least 1,000 units at a time, or all of your remaining units if you own less than
1,000 units. No redemption or exchange can occur if delivery of common shares on
the specified redemption date to the unit holder seeking redemption would be
prohibited either under Vornado's declaration of trust or under applicable
federal or state securities laws as long as the common shares are publicly
traded.

          Each unit holder has agreed with Vornado under the partnership
agreement that all units delivered for redemption must be delivered to the
operating partnership or Vornado, as the case may be, free and clear of all
liens. Neither Vornado nor the operating partnership will be under any
obligation to acquire units if there are liens on the units. Each unit holder
has also agreed to pay any state or local property transfer tax that is payable
as a result of the transfer of his or her units to the operating partnership or
Vornado.

          If a unit holder assigns his or her units to another person, that
person may redeem the units. In that case, the redemption price will be paid
directly to that person and not to the unit holder.

          If Vornado provides notice to the unit holders that it intends to make
an extraordinary distribution of cash or property to its shareholders or to
effect a merger, a sale of all or substantially all of its assets or any other
similar extraordinary transaction, the right to redeem units will be exercisable
during the period commencing on the date on which Vornado provides that notice
and ending on either:

          -    if there is a record date to determine shareholders eligible to
               receive the extraordinary distribution or to vote upon the
               approval of the merger, sale or other extraordinary transaction,
               the record date; or

          -    if there is no record date of this kind, the date that is twenty
               days after the date on which Vornado provides notice of the
               extraordinary distribution or extraordinary transaction.

          A holder must have held his or her units for at least one year from
the date of issuance to have the right to redeem them under these circumstances.
If this paragraph applies, the specified redemption date will be the sooner of:

          -    the tenth business day after the operating partnership receives
               the notice of redemption; or

          -    the business day immediately preceding the record date to
               determine shareholders eligible to receive the extraordinary
               distribution or vote on approval of the extraordinary
               transaction.

          However, if the specified redemption date occurs in less than ten
business days and the operating partnership elects to redeem the units for cash,
the operating partnership will have up to ten business days after receiving the
notice of redemption to deliver payment for the units.

          If Vornado merges or consolidates with another company or sells all or
substantially all of its assets as a whole and Vornado's shareholders are
obligated to accept cash and/or debt obligations in full or partial payment for
their common shares in the transaction, then the portion of the payment per unit
payable

                                       21


upon redemption of the units that must be accepted in cash and/or debt
obligations will be equal to an amount of cash equal to the sum of:

          -    the cash payable for one common share multiplied by the
               conversion factor; and

          -    the value, on the date on which the transaction is consummated,
               of the debt obligations to be received with respect to one common
               share multiplied by the conversion factor.

          The balance of the amount payable per unit when units are redeemed
will be payable in an amount calculated consistently with the first paragraph of
this section.

          If the common shares are not publicly traded but another entity whose
shares are publicly traded owns more than 50% of the shares of Vornado, the unit
holders' right to redeem units will be determined by reference to the publicly
traded stock of that majority owner of Vornado. In that case, the general
partner of the operating partnership will have the right to elect to acquire the
units to be redeemed for publicly traded stock of the majority owner of Vornado.
If the common shares are not publicly traded and there is no majority owner of
Vornado with publicly traded stock, the unit holders' right to redeem units
would be based upon the net fair market value of the operating partnership's
assets at the time the units are redeemed, as determined in good faith by
Vornado. In that case, Vornado and the operating partnership would be obligated
to pay for redeemed units in cash, payable on the thirtieth business day after
Vornado receives the notice of redemption.

REGISTRATION RIGHTS

          Under the registration rights agreement between Vornado and the unit
holders named in the agreement, which has been filed as an exhibit to the
registration statement of which this prospectus forms a part, those unit holders
have the right to demand registration of the common shares for which their units
may be redeemed when they redeem their units, unless the shares they receive are
already registered under an effective registration statement filed with the SEC.
The registration rights agreement provides that Vornado will pay all expenses of
registering the shares. The agreement also provides that the holders of the
shares will pay any brokerage and sales commissions, fees and disbursements of
counsel to the holders, accountants and other advisors, and any transfer taxes
relating to the sale or disposition of the shares by the holders.

TAX CONSEQUENCES OF REDEMPTION

          The following discussion summarizes the material federal income tax
considerations that may be relevant to a unit holder who redeems his or her
units. This discussion only applies to unit holders that provide an affidavit to
the operating partnership, at the time their units are redeemed, stating that
the unit holder is not a foreign person and stating the unit holder's taxpayer
identification number, under penalties of perjury.

          YOU SHOULD CONSULT YOUR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO YOU OF REDEEMING YOUR UNITS, INCLUDING THE FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF REDEEMING UNITS IN YOUR PARTICULAR CIRCUMSTANCES
AND POTENTIAL CHANGES IN APPLICABLE LAWS.

TAX TREATMENT OF REDEMPTION OF UNITS

          If Vornado assumes and performs the redemption obligation, the
partnership agreement provides that the redemption will be treated by Vornado,
the operating partnership and the redeeming unit holder as a sale of units by
the redeeming unit holder to Vornado at the time the units are redeemed. This
sale will be fully taxable to the redeeming unit holder, and the redeeming unit
holder will be treated as realizing for tax purposes an amount equal to the sum
of:

                                       22


          -    the cash or the value of the common shares received in the
               exchange; plus

          -    the amount of operating partnership liabilities allocable to the
               redeemed units at the time they are redeemed.

          The amount of operating partnership liabilities considered in this
calculation will include the operating partnership's share of the liabilities of
some entities in which the operating partnership owns an interest. The
determination of the amount of gain or loss is discussed more fully under "--
Tax Treatment of Disposition of Units by Unit Holders Generally" below.

          If Vornado does not elect to assume the obligation to redeem a unit
holder's units, the operating partnership will redeem the units for cash. If the
operating partnership redeems units for cash that Vornado contributes to the
operating partnership for that purpose, the redemption likely would be treated
for tax purposes as a sale of the units to Vornado in a fully taxable
transaction, although this is not certain. If the redemption is treated that way
for tax purposes, the redeeming unit holder would be treated as realizing an
amount equal to the sum of:

          -    the cash received in the exchange; plus

          -    the amount of operating partnership liabilities allocable to the
               redeemed units at the time they are redeemed.

The amount of operating partnership liabilities considered in this calculation
will include the operating partnership's share of the liabilities of some
entities in which the operating partnership owns an interest. The determination
of the amount of gain or loss if a redemption is treated as a sale for tax
purposes is discussed more fully under "--Tax Treatment of Disposition of Units
by Unit Holders Generally" below.

          If, instead, the operating partnership chooses to redeem units for
cash that is not contributed by Vornado for that purpose, the tax consequences
would be the same as described in the previous paragraph with the following
exception. If the operating partnership redeems less than all of a unit holder's
units, the unit holder would not be permitted to recognize any loss occurring on
the transaction and would recognize taxable gain only to the extent that the
amount he or she would be treated as receiving, as described above, exceeded his
or her adjusted basis in all of his or her units immediately before the
redemption.

POTENTIAL APPLICATION OF DISGUISED SALE REGULATIONS TO A REDEMPTION OF UNITS

          A redemption of units may cause the original transfer of property to
the operating partnership in exchange for units to be treated as a "disguised
sale" of property. The Internal Revenue Code and the Treasury regulations under
the Internal Revenue Code generally provide that, unless one of the prescribed
exceptions is applicable, a partner's contribution of property to a partnership
and a simultaneous or subsequent transfer of money or other consideration from
the partnership to the partner, including the partnership's assumption of a
liability or taking the property subject to a liability, will be presumed to be
a sale, in whole or in part, of the property by the partner to the partnership.
Further, the Treasury regulations provide generally that, in the absence of an
applicable exception, if a partnership transfers money or other consideration to
a partner within two years after the partner contributed property to the
partnership, the transactions will be presumed to be a sale of the contributed
property unless the facts and circumstances clearly establish that the transfers
do not constitute a sale. The Treasury regulations also provide that if two
years have passed between the time when the partner contributed property to the
partnership and the time when the partnership transferred money or other
consideration to the partner, the transactions will be presumed not to be a sale
unless the facts and circumstances clearly establish that the transfers
constitute a sale.

                                       23


          Accordingly, if the operating partnership redeems a unit, the Internal
Revenue Service could contend that the redemption should be treated as a
disguised sale because the redeeming unit holder will receive cash or common
shares after having contributed property to the operating partnership. If the
IRS took that position successfully, the issuance of the units in exchange for
the contributed property could be taxable as a disguised sale under the Treasury
regulations.

TAX TREATMENT OF DISPOSITION OF UNITS BY UNIT HOLDERS GENERALLY

          If a unit holder redeems units in a manner that is treated as a sale
of the units, the gain or loss from the sale or other disposition will be based
on the difference between:

          -    the amount considered realized for tax purposes; and

          -    the unit holder's tax basis in the units.

          See "--Basis of Units" below for information about the tax basis of
units.

          If a unit holder sells units, the "amount realized" will be measured
by the sum of:

          -    the cash and fair market value of other property received,
               including any common shares; plus

          -    the portion of the operating partnership's liabilities allocable
               to the units sold.

          The amount of operating partnership liabilities considered in this
calculation will include the operating partnership's share of the liabilities of
some entities in which the operating partnership owns an interest.

          A selling unit holder will recognize gain to the extent that the
amount he or she realizes in the sale exceeds his or her basis in the units
sold. It is possible that the amount of gain recognized or even the tax
liability resulting from the gain could exceed the amount of cash and the value
of any other property, including common shares, received in exchange for the
units.

          Except as described below, any gain recognized upon a sale or other
disposition of units will be treated as gain attributable to the sale or
disposition of a capital asset. To the extent, however, that the amount realized
upon the sale of a unit attributable to a unit holder's share of "unrealized
receivables" of the operating partnership, as defined in Section 751 of the
Internal Revenue Code, exceeds the basis attributable to those assets, this
excess will be treated as ordinary income. Unrealized receivables include, to
the extent not previously included in operating partnership income, any rights
to payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income if the
operating partnership had sold its assets at their fair market value at the time
of the transfer of a unit.

          For non-corporate holders, the maximum rate of tax on the net capital
gain from the sale or exchange of a capital asset held for more than one year is
20%. The maximum rate for net capital gains attributable to the sale of
depreciable real property held for more than one year is 25% to the extent of
the prior deductions for depreciation that are not otherwise recaptured as
ordinary income under the existing depreciation recapture rules.

          The IRS has authority to issue regulations that could, among other
things, apply these rates on a look-through basis in the case of "pass-through"
entities such as Vornado and the operating partnership. The IRS has not yet
issued regulations of this kind. If it does not issue regulations of this kind
in the future, the rate of tax that would apply to the disposition of a unit by
a non-corporate holder would be determined based upon the period of time over
which the non-corporate holder held the unit. The IRS might, however,

                                       24


issue regulations that would provide that the rate of tax that would apply to
the disposition of a unit by a non-corporate holder would be determined based
upon the nature of the assets of the operating partnership and the periods of
time over which the operating partnership held the assets. Moreover, if the IRS
adopts regulations of this kind, they might apply retroactively.

BASIS OF UNITS

          In general, a unit holder who received units in exchange for
contributing an interest in a partnership has an initial tax basis in the units
equal to his or her basis in the contributed partnership interest. A unit
holder's initial basis in his or her units generally is increased by:

          -    the unit holder's share of operating partnership taxable and
               tax-exempt income;

          -    increases in his or her share of the liabilities of the operating
               partnership, including the operating partnership's share of the
               liabilities of some entities in which the operating partnership
               owns an interest; and

          -    any gain recognized under Section 737 of the Internal Revenue
               Code due to the receipt of a distribution from the operating
               partnership within seven years after the unit holder contributed
               property to the operating partnership.

          Generally, a unit holder's initial basis in his or her units is
decreased by:

          -    his or her share of operating partnership distributions;

          -    decreases in his or her share of liabilities of the operating
               partnership, including the operating partnership's share of the
               liabilities of some entities in which the operating partnership
               owns an interest;

          -    his or her share of losses of the operating partnership; and

          -    his or her share of nondeductible expenditures of the operating
               partnership that are not chargeable to capital.

However, a unit holder's initial basis will not decrease below zero.

                                       25


                          DESCRIPTION OF COMMON SHARES

          The following description of the material terms of the common shares
of Vornado is only a summary and is qualified in its entirety by reference to
the provisions governing the common shares contained in the declaration of
trust, including all amendments and supplements to the declaration of trust, and
bylaws of Vornado. Copies of the declaration of trust and bylaws are exhibits to
the registration statement of which this prospectus is a part. See "Where You
Can Find More Information" for information regarding how to obtain a copy of
those documents.

VORNADO'S AUTHORIZED AND OUTSTANDING CLASSES OF SHARES

          The declaration of trust authorizes the issuance of up to 540,000,000
shares of beneficial interest, consisting of:

          -    200,000,000 common shares of beneficial interest, par value $0.04
               per share;

          -    70,000,000 preferred shares of beneficial interest, without par
               value; and

          -    270,000,000 excess shares of beneficial interest, par value $0.04
               per share.

Of the authorized 70,000,000 preferred shares, Vornado Realty Trust has
designated:

          -    5,789,315 as $3.25 Series A Convertible Preferred Shares;

          -    3,400,000 as 8.5% Series B Cumulative Redeemable Preferred
               Shares;

          -    4,600,000 as 8.5% Series C Cumulative Redeemable Preferred
               Shares;

          -    3,500,000 as Series D-1 8.5% Cumulative Redeemable Preferred
               Shares;

          -    549,336 as 8.375% Series D-2 Cumulative Redeemable Preferred
               Shares;

          -    8,000,000 as Series D-3 8.25% Cumulative Redeemable Preferred
               Shares;

          -    5,000,000 as Series D-4 8.25% Cumulative Redeemable Preferred
               Shares;

          -    6,480,000 as Series D-5 8.25% Cumulative Redeemable Preferred
               Shares;

          -    1,000,000 as Series D-6 8.25% Cumulative Redeemable Preferred
               Shares;

          -    7,200,000 as Series D-7 8.25% Cumulative Redeemable Preferred
               Shares;

          -    360,000 as Series D-8 8.25% Cumulative Redeemable Preferred
               Shares; and

          -    1,800,000 as Series D-9 8.25% Cumulative Redeemable Preferred
               Shares.

As of November 30, 2002, the following shares were issued and outstanding:

          -    108,439,971 common shares;

          -    1,471,423 Series A preferred shares;

                                       26


          -    3,400,000 Series B preferred shares; and

          -    4,600,000 Series C preferred shares.

          No Series D-1, Series D-2, Series D-3, Series D-4, Series D-5, Series
D-6, Series D-7, Series D-8, or Series D-9 preferred shares were issued and
outstanding as of November 30, 2002. Shares of each of these series may be
issued in the future upon redemption of preferred units of limited partnership
interest of the operating partnership of a corresponding series that were issued
and outstanding as of November 30, 2002. No excess shares were issued and
outstanding as of November 30, 2002.

DIVIDEND AND VOTING RIGHTS OF HOLDERS OF COMMON SHARES

          The holders of common shares are entitled to receive dividends when,
if and as authorized by the Vornado board and declared by Vornado out of assets
legally available to pay dividends, if receipt of the dividends is in compliance
with the provisions in the declaration of trust restricting the transfer of
shares of beneficial interest. However, if any preferred shares are at the time
outstanding, Vornado may only pay dividends or other distributions on common
shares or purchase common shares if full cumulative dividends have been paid on
outstanding preferred shares and there is no arrearage in any mandatory sinking
fund on outstanding preferred shares. The terms of the series of preferred
shares that are now issued and outstanding do not provide for any mandatory
sinking fund.

          The holders of common shares are entitled to one vote for each share
on all matters on which shareholders are entitled to vote, including elections
of trustees. There is no cumulative voting in the election of trustees, which
means that the holders of a majority of the outstanding common shares can elect
all of the trustees then standing for election. The holders of common shares do
not have any conversion, redemption or preemptive rights to subscribe to any
securities of Vornado. If Vornado is dissolved, liquidated or wound up, holders
of common shares are entitled to share proportionally in any assets remaining
after the prior rights of creditors, including holders of the indebtedness of
Vornado Realty Trust, and the aggregate liquidation preference of any preferred
shares then outstanding are satisfied in full.

          The common shares have equal dividend, distribution, liquidation and
other rights and have no preference, appraisal or exchange rights. All
outstanding common shares are, and the common shares offered by this prospectus,
upon issuance, will be, duly authorized, fully paid and non-assessable.

RESTRICTIONS ON OWNERSHIP OF COMMON SHARES

THE COMMON SHARES BENEFICIAL OWNERSHIP LIMIT

          For Vornado to maintain its qualification as a REIT under the Internal
Revenue Code, not more than 50% of the value of its outstanding shares of
beneficial interest may be owned, directly or indirectly, by five or fewer
individuals at any time during the last half of a taxable year and the shares of
beneficial interest must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months, or during a proportionate part of
a shorter taxable year. The Internal Revenue Code defines "individuals" to
include some entities for purposes of the preceding sentence. All references to
a shareholder's ownership of common shares in this section "-- The common shares
beneficial ownership limit" assume application of the applicable attribution
rules of the Internal Revenue Code under which, for example, a shareholder is
deemed to own shares owned by his or her spouse.

          The declaration of trust contains a number of provisions that restrict
the ownership and transfer of shares. These provisions seek to safeguard Vornado
against an inadvertent loss of its REIT status and to deter non-negotiated
acquisitions of, and proxy fights for, us by third parties. The declaration of
trust contains a limitation that restricts, with some exceptions, shareholders
from owning more than a specified percentage of the outstanding common shares.
We call this percentage the "common shares beneficial

                                       27


ownership limit." The common shares beneficial ownership limit was initially set
at 2.0% of the outstanding common shares. The Vornado board subsequently adopted
a resolution increasing the common shares beneficial ownership limit from 2.0%
to 6.7% of the outstanding common shares and has the authority to grant limited
exemptions from the common shares beneficial ownership limit. The shareholders
who owned more than 6.7% of the common shares immediately after the merger of
Vornado, Inc. into Vornado in May 1993 may continue to do so and may acquire
additional common shares through stock option and similar plans or from other
shareholders who owned more than 6.7% of the common shares immediately after
that merger. However, common shares cannot be transferred if, as a result, more
than 50% in value of the outstanding shares of Vornado would be owned by five or
fewer individuals. While the shareholders who owned more than 6.7% of the common
shares immediately after the merger of Vornado, Inc. into Vornado in May 1993
are not generally permitted to acquire additional common shares from any other
source, these shareholders may acquire additional common shares from any source
if Vornado issues additional common shares, up to the percentage held by them
immediately before Vornado issues the additional shares.

          Shareholders should be aware that events other than a purchase or
other transfer of common shares can result in ownership, under the applicable
attribution rules of the Internal Revenue Code, of common shares in excess of
the common shares beneficial ownership limit. For instance, if two shareholders,
each of whom owns 3.5% of the outstanding common shares, were to marry, then
after their marriage both shareholders would be deemed to own 7.0% of the
outstanding common shares, which is in excess of the common shares beneficial
ownership limit. Similarly, if a shareholder who owns 4.9% of the outstanding
common shares were to purchase a 50% interest in a corporation which owns 4.8%
of the outstanding common shares, then the shareholder would be deemed to own
7.3% of the outstanding common shares. You should consult your own tax advisors
concerning the application of the attribution rules of the Internal Revenue Code
in your particular circumstances.

THE CONSTRUCTIVE OWNERSHIP LIMIT

          Under the Internal Revenue Code, rental income received by a REIT from
persons in which the REIT is treated, under the applicable attribution rules of
the Internal Revenue Code, as owning a 10% or greater interest does not
constitute qualifying income for purposes of the income requirements that REITs
must satisfy. For these purposes, a REIT is treated as owning any stock owned,
under the applicable attribution rules of the Internal Revenue Code, by a person
that owns 10% or more of the value of the outstanding shares of the REIT. The
attribution rules of the Internal Revenue Code applicable for these purposes are
different from those applicable with respect to the common shares beneficial
ownership limit. All references to a shareholder's ownership of common shares in
this section "-- The constructive ownership limit" assume application of the
applicable attribution rules of the Internal Revenue Code.

          In order to ensure that rental income of Vornado will not be treated
as nonqualifying income under the rule described in the preceding paragraph, and
thus to ensure that Vornado will not inadvertently lose its REIT status as a
result of the ownership of shares by a tenant, or a person that holds an
interest in a tenant, the declaration of trust contains an ownership limit that
restricts, with some exceptions, shareholders from owning more than 9.9% of the
outstanding shares of any class. We refer to this 9.9% ownership limit as the
"constructive ownership limit." The shareholders who owned shares in excess of
the constructive ownership limit immediately after the merger of Vornado, Inc.
into Vornado in May 1993 generally are not subject to the constructive ownership
limit. The declaration of trust also contains restrictions that are designed to
ensure that the shareholders who owned shares in excess of the constructive
ownership limit immediately after the merger of Vornado, Inc. into Vornado in
May 1993 will not, in the aggregate, own a large enough interest in a tenant or
subtenant of the REIT to cause rental income received, directly or indirectly,
by the REIT from that tenant or subtenant to be treated as nonqualifying income
for purposes of the income requirements that REITs must satisfy. The
restrictions described in the preceding sentence have an exception for tenants
and subtenants from whom the REIT receives, directly or indirectly, rental
income that is not in excess of a specified threshold.

                                       28


          Shareholders should be aware that events other than a purchase or
other transfer of shares can result in ownership, under the applicable
attribution rules of the Internal Revenue Code, of shares in excess of the
constructive ownership limit. As the attribution rules that apply with respect
to the constructive ownership limit differ from those that apply with respect to
the common shares beneficial ownership limit, the events other than a purchase
or other transfer of shares which can result in share ownership in excess of the
constructive ownership limit can differ from those which can result in share
ownership in excess of the common shares beneficial ownership limit. You should
consult your own tax advisors concerning the application of the attribution
rules of the Internal Revenue Code in your particular circumstances.

ISSUANCE OF EXCESS SHARES IF THE OWNERSHIP LIMITS ARE VIOLATED

          The declaration of trust provides that a transfer of common shares
that would otherwise result in ownership, under the applicable attribution rules
of the Internal Revenue Code, of common shares in excess of the common shares
beneficial ownership limit or the constructive ownership limit, or which would
cause the shares of beneficial interest of Vornado to be beneficially owned by
fewer than 100 persons, will have no effect and the purported transferee will
acquire no rights or economic interest in the common shares. In addition, the
declaration of trust provides that common shares that would otherwise be owned,
under the applicable attribution rules of the Internal Revenue Code, in excess
of the common shares beneficial ownership limit or the constructive ownership
limit will be automatically exchanged for excess shares. These excess shares
will be transferred, by operation of law, to Vornado as trustee of a trust for
the exclusive benefit of a beneficiary designated by the purported transferee or
purported holder. While so held in trust, excess shares are not entitled to vote
and are not entitled to participate in any dividends or distributions made by
Vornado. Any dividends or distributions received by the purported transferee or
other purported holder of the excess shares before Vornado discovers the
automatic exchange for excess shares must be repaid to Vornado upon demand.

          If the purported transferee or purported holder elects to designate a
beneficiary of an interest in the trust with respect to the excess shares, he or
she may designate only a person whose ownership of the shares will not violate
the common shares beneficial ownership limit or the constructive ownership
limit. When the designation is made, the excess shares will be automatically
exchanged for common shares. The declaration of trust contains provisions
designed to ensure that the purported transferee or other purported holder of
the excess shares may not receive in return for transferring an interest in the
trust with respect to the excess shares, an amount that reflects any
appreciation in the common shares that were exchanged during the period that the
excess shares were outstanding but will bear the burden of any decline in value
during that period. Any amount received by a purported transferee or other
purported holder for designating a beneficiary in excess of the amount permitted
to be received must be turned over to Vornado. The declaration of trust provides
that Vornado, or its designee, may purchase any excess shares that have been
automatically exchanged for common shares as a result of a purported transfer or
other event. The price at which Vornado, or its designee, may purchase the
excess shares will be equal to the lesser of:

          -    in the case of excess shares resulting from a purported transfer
               for value, the price per share in the purported transfer that
               resulted in the automatic exchange for excess shares, or in the
               case of excess shares resulting from some other event, the market
               price of the common shares exchanged on the date of the automatic
               exchange for excess shares; and

          -    the market price of the common shares exchanged for the excess
               shares on the date that Vornado accepts the deemed offer to sell
               the excess shares.

          The right of Vornado to buy the excess shares will exist for 90 days,
beginning on the date that the automatic exchange for excess shares occurred or,
if Vornado did not receive a notice concerning the purported transfer that
resulted in the automatic exchange for excess shares, the date that the Vornado
board determines in good faith that an exchange for excess shares has occurred.

                                       29


OTHER PROVISIONS CONCERNING THE RESTRICTIONS ON OWNERSHIP

          The Vornado board may exempt persons from the common shares beneficial
ownership limit or the constructive ownership limit, including the limitations
applicable to holders who owned in excess of 6.7% of the common shares
immediately after the merger of Vornado, Inc. into Vornado in May 1993, if
evidence satisfactory to the Vornado board is presented showing that the
exemption will not jeopardize the status of Vornado as a REIT under the Internal
Revenue Code. No exemption to a person that is an individual for purposes of
Section 542(a)(2) of the Internal Revenue Code, however, may permit the
individual to have beneficial ownership with respect to any class of shares in
excess of 9.9% of the outstanding shares of the class. Before granting an
exemption of this kind, the Vornado board may require a ruling from the IRS, an
opinion of counsel satisfactory to it and representations and undertakings from
the applicant with respect to preserving the REIT status of Vornado.

          The foregoing restrictions on transferability and ownership will not
apply if the Vornado board determines that it is no longer in the best interests
of Vornado to attempt to qualify, or to continue to qualify, as a REIT.

          All persons who own, directly or by virtue of the applicable
attribution rules of the Internal Revenue Code, more than 2.0% of the
outstanding common shares must give a written notice to Vornado containing the
information specified in the declaration of trust by January 31 of each year. In
addition, each shareholder will be required to disclose to Vornado upon demand
any information that Vornado may request, in good faith, to determine the status
of Vornado as a REIT or to comply with Treasury regulations promulgated under
the REIT provisions of the Internal Revenue Code.

          The ownership restrictions described above may have the effect of
precluding acquisition of control of Vornado unless the Vornado board determines
that maintenance of REIT status is no longer in the best interests of Vornado.

                                 TRANSFER AGENT

          The transfer agent for common shares of Vornado is Wachovia Bank, N.A.
located in Charlotte, North Carolina.

                                       30


                        FEDERAL INCOME TAX CONSIDERATIONS

          The following discussion summarizes the taxation of Vornado Realty
Trust and the material Federal income tax consequences to holders of the common
shares for your general information only. It is not tax advice. The tax
treatment of a holder of common shares will vary depending upon the holder's
particular situation, and this discussion addresses only holders that hold
common shares as capital assets and does not deal with all aspects of taxation
that may be relevant to particular holders in light of their personal
investment or tax circumstances. This section also does not deal with all
aspects of taxation that may be relevant to certain types of holders to
which special provisions of the Federal income tax laws apply, including:

          -    dealers in securities or currencies;

          -    traders in securities that elect to use a mark-to-market method
               of accounting for their securities holdings;

          -    banks;

          -    tax-exempt organizations;

          -    certain insurance companies;

          -    persons liable for the alternative minimum tax;

          -    persons that hold securities that are a hedge, that are hedged
               against currency risks or that are part of a straddle or
               conversion transaction; and

          -    persons whose functional currency is not the U.S. dollar.

          This summary is based on the Internal Revenue Code, its legislative
history, existing and proposed regulations under the Internal Revenue Code,
published rulings and court decisions. This summary describes the provisions of
these sources of law only as they are currently in effect. All of these sources
of law may change at any time, and any change in the law may apply
retroactively.

          WE URGE YOU TO CONSULT WITH YOUR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES TO YOU OF ACQUIRING, OWNING AND SELLING COMMON SHARES, INCLUDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACQUIRING, OWNING AND
SELLING COMMON SHARES IN YOUR PARTICULAR CIRCUMSTANCES AND POTENTIAL CHANGES IN
APPLICABLE LAWS.

                          TAXATION OF VORNADO AS A REIT

          In the opinion of Sullivan & Cromwell, commencing with its taxable
year ended December 31, 1993, Vornado Realty Trust has been organized and
operated in conformity with the requirements for qualification and taxation
as a REIT under the Internal Revenue Code, and Vornado Realty Trust's proposed
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Internal Revenue Code. Investors
should be aware, however, that opinions of counsel are not binding upon the
Internal Revenue Service or any court.

          In providing its opinion, Sullivan & Cromwell is relying,

          -    as to certain factual matters upon the statements and
               representations contained in certificates provided to Sullivan &
               Cromwell by Vornado, Two Penn Plaza, REIT, Inc. and AmeriCold
               Corporation;

                                       31


          -    without independent investigation, as to certain factual matters
               upon the statements and representations contained in the
               certificate provided to Sullivan & Cromwell by Alexander's;

          -    without independent investigation, upon the opinion of Shearman &
               Sterling concerning the qualification of Alexander's as a REIT
               for each taxable year commencing with its taxable year ending
               December 31, 1995; and

          -   in providing its opinion regarding the qualification of
              Alexander's as a REIT for Federal income tax purposes,
              Shearman & Sterling is relying, as to certain factual
              matters, upon representations received from Alexander's.

          Vornado's qualification as a REIT will depend upon the continuing
satisfaction by Vornado and, given Vornado's current ownership interest in
Alexander's, AmeriCold and Two Penn, by Alexander's, AmeriCold and Two Penn, of
the requirements of the Internal Revenue Code relating to qualification for REIT
status. Some of these requirements depend upon actual operating results,
distribution levels, diversity of stock ownership, asset composition, source of
income and record keeping. Accordingly, while Vornado intends to continue to
qualify to be taxed as a REIT, the actual results of Vornado's, Two Penn's,
AmeriCold's or Alexander's operations for any particular year might not satisfy
these requirements. Neither Sullivan & Cromwell nor Shearman & Sterling will
monitor the compliance of Vornado, Two Penn, AmeriCold or Alexander's with the
requirements for REIT qualification on an ongoing basis.

          The sections of the Internal Revenue Code applicable to REITs are
highly technical and complex. The following discussion summarizes material
aspects of these sections of the Internal Revenue Code.

          As a REIT, Vornado generally will not have to pay Federal corporate
income taxes on its net income that it currently distributes to shareholders.
This treatment substantially eliminates the "double taxation" at the corporate
and shareholder levels that generally results from investment in a regular
corporation.

          However, Vornado will have to pay Federal income tax as follows:

          -    First, Vornado will have to pay tax at regular corporate rates on
               any undistributed real estate investment trust taxable income,
               including undistributed net capital gains.

          -    Second, under certain circumstances, Vornado may have to pay the
               alternative minimum tax on its items of tax preference.

          -    Third, if Vornado has (a) net income from the sale or other
               disposition of "foreclosure property", as defined in the Internal
               Revenue Code, which is held primarily for sale to customers in
               the ordinary course of business or (b) other non-qualifying
               income from foreclosure property, it will have to pay tax at the
               highest corporate rate on that income.

          -    Fourth, if Vornado has net income from "prohibited transactions",
               as defined in the Internal Revenue Code, Vornado will have to pay
               a 100% tax on that income. Prohibited transactions are, in
               general, certain sales or other dispositions of property, other
               than foreclosure property, held primarily for sale to customers
               in the ordinary course of business.

          -    Fifth, if Vornado should fail to satisfy the 75% gross income
               test or the 95% gross income test, as discussed below under " --
               Requirements for Qualification -- Income Tests", but has
               nonetheless maintained its qualification as a REIT because
               Vornado has satisfied some other requirements, it will have to
               pay a 100% tax on an amount equal to (a) the gross income
               attributable to the greater of (i) 75% of Vornado's gross income
               over the amount of gross

                                       32


               income that is qualifying income for purposes of the 75% test,
               and (ii) 90% of Vornado's gross income (95% for taxable years
               ending before January 1, 2001) over the amount of gross income
               that is qualifying income for purposes of the 95% test,
               multiplied by (b) a fraction intended to reflect Vornado's
               profitability.

          -    Sixth, if Vornado should fail to distribute during each calendar
               year at least the sum of (1) 85% of its real estate investment
               trust ordinary income for that year, (2) 95% of its real estate
               investment trust capital gain net income for that year and (3)
               any undistributed taxable income from prior periods, Vornado
               would have to pay a 4% excise tax on the excess of that required
               distribution over the amounts actually distributed.

          -    Seventh, if during the 10-year period beginning on the first day
               of the first taxable year for which Vornado qualified as a REIT,
               Vornado recognizes gain on the disposition of any asset held by
               Vornado as of the beginning of that period, then, to the extent
               of the excess of (a) fair market value of that asset as of the
               beginning of that period over (b) Vornado's adjusted basis in
               that asset as of the beginning of that period, Vornado will have
               to pay tax on that gain at the highest regular corporate rate. We
               refer to the excess of fair market value over adjusted basis
               described in the preceding sentence as "built-in gain."

               Notwithstanding the taxation of built-in gain described in the
               preceding paragraph of this bullet point, Vornado will not have
               to pay tax on recognized built-in gain with respect to assets
               held as of the first day of the 10-year period beginning on the
               first day of the first taxable year for which Vornado qualified
               as a REIT, to the extent that the aggregate amount of that
               recognized built-in gain exceeds the net aggregate amount of
               Vornado's unrealized built-in gain as of the first day of that
               period.

          -    Eighth, if Vornado acquires any asset from a C corporation in
               certain transactions in which Vornado must adopt the basis of the
               asset or any other property in the hands of the C corporation as
               the basis of the asset in the hands of Vornado, and Vornado
               recognizes gain on the disposition of that asset during the
               10-year period beginning on the date on which Vornado acquired
               that asset, then Vornado will have to pay tax on the built-in
               gain at the highest regular corporate rate. A C corporation means
               generally a corporation that has to pay full corporate-level tax.

          -    Ninth, for taxable years beginning after December 31, 2000
               if Vornado receives non-arm's-length income from a taxable
               REIT subsidiary (as defined under " -- Requirements for
               Qualification -- Asset Tests"), or as a result of services
               provided by a taxable REIT subsidiary to tenants of Vornado,
               Vornado will be subject to a 100% tax on the amount of Vornado's
               non-arm's-length income.

REQUIREMENTS FOR QUALIFICATION

          The Internal Revenue Code defines a REIT as a corporation, trust or
association

          -    which is managed by one or more trustees or directors;

          -    the beneficial ownership of which is evidenced by transferable
               shares, or by transferable certificates of beneficial interest;

          -    which would otherwise be taxable as a domestic corporation, but
               for Sections 856 through 859 of the Internal Revenue Code;

          -    which is neither a financial institution nor an insurance company
               to which certain provisions of the Internal Revenue Code apply;

                                       33


          -    the beneficial ownership of which is held by 100 or more persons;

          -    during the last half of each taxable year, not more than 50% in
               value of the outstanding stock of which is owned, directly or
               constructively, by five or fewer individuals, as defined in the
               Internal Revenue Code to include certain entities; and

          -    which meets certain other tests, described below, regarding the
               nature of its income and assets.

          The Internal Revenue Code provides that the conditions described in
the first through fourth bullet points above must be met during the entire
taxable year and that the condition described in the fifth bullet point above
must be met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months.

          Vornado has satisfied the conditions described in the first through
fifth bullet points of the preceding paragraph and believes that it has also
satisfied the condition described in the sixth bullet point of the preceding
paragraph. In addition, Vornado's declaration of trust provides for restrictions
regarding the ownership and transfer of Vornado's shares of beneficial interest.
These restrictions are intended to assist Vornado in continuing to satisfy the
share ownership requirements described in the fifth and sixth bullet points of
the preceding paragraph. The ownership and transfer restrictions pertaining to
the common shares are described in this prospectus under the heading
"Description of Common Shares -- Restrictions on Ownership of Common Shares."

          Vornado owns a number of wholly owned corporate subsidiaries. Internal
Revenue Code Section 856(i) provides that unless a REIT makes an election to
treat the corporation as a taxable REIT subsidiary, a corporation which is a
"qualified REIT subsidiary", as defined in the Internal Revenue Code, will not
be treated as a separate corporation, and all assets, liabilities, and items of
income, deduction, and credit of a qualified REIT subsidiary will be treated as
assets, liabilities and items of these kinds of the REIT. Thus, in applying the
requirements described in this section, Vornado's qualified REIT subsidiaries
will be ignored, and all assets, liabilities and items of income, deduction, and
credit of these subsidiaries will be treated as assets, liabilities and items of
these kinds of Vornado. Vornado believes that all of its wholly owned corporate
subsidiaries are qualified REIT subsidiaries.

          If a REIT is a partner in a partnership, Treasury regulations provide
that the REIT will be deemed to own its proportionate share of the assets of the
partnership and will be deemed to be entitled to the income of the partnership
attributable to that share. In addition, the character of the assets and gross
income of the partnership will retain the same character in the hands of the
REIT for purposes of Section 856 of the Internal Revenue Code, including
satisfying the gross income tests and the asset tests. Thus, Vornado's
proportionate share of the assets, liabilities and items of income of any
partnership in which Vornado is a partner, including the operating partnership,
will be treated as assets, liabilities and items of income of Vornado for
purposes of applying the requirements described in this section. Thus, actions
taken by partnerships in which Vornado owns an interest either directly or
through one or more tiers of partnerships or qualified REIT subsidiaries, can
affect Vornado's ability to satisfy the REIT income and assets tests and the
determination of whether Vornado has net income from prohibited transactions.
See the fourth bullet point on page 32 for a discussion of prohibited
transactions.

INCOME TESTS.

          In order to maintain its qualification as a REIT, Vornado annually
must satisfy three gross income requirements.

          -    First, Vornado must derive at least 75% of its gross income,
               excluding gross income from prohibited transactions, for each
               taxable year directly or indirectly from investments relating

                                       34


               to real property or mortgages on real property, including "rents
               from real property", as defined in the Internal Revenue Code, or
               from certain types of temporary investments. Rents from real
               property generally include expenses of Vornado that are paid or
               reimbursed by tenants.

          -    Second, at least 95% of Vornado's gross income, excluding gross
               income from prohibited transactions, for each taxable year must
               be derived from real property investments as described in the
               preceding bullet point, dividends, interest and gain from the
               sale or disposition of stock or securities, or from any
               combination of these types of source.

          -    Third, for its taxable years before 1998, short-term gain from
               the sale or other disposition of stock or securities, gain from
               prohibited transactions and gain on the sale or other disposition
               of real property held for less than four years, apart from
               involuntary conversions and sales of foreclosure property, was
               required to represent less than 30% of Vornado's gross income,
               including gross income from prohibited transactions, for each of
               these taxable years.

          Rents that Vornado receives will qualify as rents from real property
in satisfying the gross income requirements for a REIT described above only if
the rents satisfy several conditions.

          -    First, the amount of rent must not be based in whole or in part
               on the income or profits of any person. However, an amount
               received or accrued generally will not be excluded from rents
               from real property solely because it is based on a fixed
               percentage or percentages of receipts or sales.

          -    Second, the Internal Revenue Code provides that rents received
               from a tenant will not qualify as rents from real property in
               satisfying the gross income tests if the REIT, directly or under
               the applicable attribution rules, owns a 10% or greater interest
               in that tenant; except that for tax years beginning after
               December 31, 2000, rents received from a taxable REIT subsidiary,
               under certain circumstances, qualify as rents from real property
               even if Vornado owns more than a 10% interest in the subsidiary.
               We refer to a tenant in which Vornado owns a 10% or greater
               interest as a "related party tenant."

          -    Third, if rent attributable to personal property leased in
               connection with a lease of real property is greater than 15% of
               the total rent received under the lease, then the portion of rent
               attributable to the personal property will not qualify as rents
               from real property.

          -    Finally, for rents received to qualify as rents from real
               property, the REIT generally must not operate or manage the
               property or furnish or render services to the tenants of the
               property, other than through an independent contractor from whom
               the REIT derives no revenue or through a taxable REIT subsidiary.
               However, Vornado may directly perform certain services that
               landlords usually or customarily render when renting space for
               occupancy only or that are not considered rendered to the
               occupant of the property.

          Vornado does not derive significant rents from related party tenants.
Vornado also does not and will not derive rental income attributable to personal
property, other than personal property leased in connection with the lease of
real property, the amount of which is less than 15% of the total rent received
under the lease.

          Vornado directly performs services for some of its tenants. Vornado
does not believe that the provision of these services will cause its gross
income attributable to these tenants to fail to be treated as rents from real
property. If Vornado were to provide services to a tenant that are other than
those landlords usually or customarily provide when renting space for occupancy
only, amounts received or accrued by Vornado for any of these services will not
be treated as rents from real property for purposes of the REIT

                                       35


gross income tests. However, the amounts received or accrued for these services
will not cause other amounts received with respect to the property to fail to be
treated as rents from real property unless the amounts treated as received in
respect of the services, together with amounts received for certain management
services, exceed 1% of all amounts received or accrued by Vornado during the
taxable year with respect to the property. If the sum of the amounts received in
respect of the services to tenants and management services described in the
preceding sentence exceeds the 1% threshold, then all amounts received or
accrued by Vornado with respect to the property will not qualify as rents from
real property, even if Vornado provides the impermissible services to some, but
not all, of the tenants of the property.

          The term "interest" generally does not include any amount received or
accrued, directly or indirectly, if the determination of that amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term interest solely
because it is based on a fixed percentage or percentages of receipts or sales.

          If Vornado fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for that year
if it satisfies the requirements of other provisions of the Internal Revenue
Code that allow relief from disqualification as a REIT. These relief provisions
will generally be available if:

          -    Vornado's failure to meet the income tests was due to reasonable
               cause and not due to willful neglect;

          -    Vornado attaches a schedule of the sources of its income to its
               Federal income tax return; and

          -    any incorrect information on the schedule was not due to fraud
               with intent to evade tax.

          Vornado might not be entitled to the benefit of these relief
provisions, however. As discussed in the fifth bullet point on page 32, even if
these relief provisions apply, Vornado would have to pay a tax on the excess
income.

ASSET TESTS.

          Vornado, at the close of each quarter of its taxable year, must also
satisfy three tests relating to the nature of its assets.

          -    First, at least 75% of the value of Vornado's total assets must
               be represented by real estate assets, including (a) real estate
               assets held by Vornado's qualified REIT subsidiaries, Vornado's
               allocable share of real estate assets held by partnerships in
               which Vornado owns an interest and stock issued by another REIT,
               (b) for a period of one year from the date of Vornado's receipt
               of proceeds of an offering of its shares of beneficial interest
               or publicly offered debt with a term of at least five years,
               stock or debt instruments purchased with these proceeds and (c)
               cash, cash items and government securities.

          -    Second, not more than 25% of Vornado's total assets may be
               represented by securities other than those in the 75% asset
               class.

          -    Third, for taxable years beginning after December 31, 2000, not
               more than 20% of Vornado's total assets may constitute
               securities issued by taxable REIT subsidiaries and of the
               investments included in the 25% asset class, the value of any
               one issuer's securities, other than securities issued by another
               REIT or by a taxable REIT subsidiary, owned by Vornado may not
               exceed 5% of the value of Vornado's total assets. Moreover,
               Vornado may not own more than 10% of the vote or value of the
               outstanding securities of any one issuer, except for issuers
               that are REITs, qualified REIT subsidiaries or taxable REIT
               subsidiaries, or debt instruments that are considered

                                       36


               straight debt under a safe harbor provision of the Internal
               Revenue Code. For these purposes, a taxable REIT subsidiary is
               any corporation in which Vornado owns an interest that joins with
               Vornado in making an election to be treated as a "taxable REIT
               subsidiary" and certain subsidiaries of a taxable REIT
               subsidiary, if the subsidiaries do not engage in certain
               activities.

          -    Fourth, of the investments included in the 25% asset class, the
               value of any one issuer's securities, other than securities
               issued by another REIT, owned by Vornado may not exceed 5% of
               the value of Vornado's total assets and Vornado may not own
               more than 10% of any one issuer's outstanding voting securities.

          The test described in Fourth, above, and not that described in Third,
above, will continue to apply for taxable years of Vornado that begin after
December 31, 2000, only with respect to stock in any corporation owned by
Vornado before July 12, 1999, so long as a taxable REIT subsidiary election is
not made with respect to the corporation and the corporation does not acquire
substantial new assets or engage in a substantial new line of business and
certain other conditions are satisfied.

          Since March 2, 1995, Vornado has owned more than 10% of the voting
securities of Alexander's. Since April of 1997, Vornado's ownership of
Alexander's has been through the operating partnership rather than direct.
Vornado's ownership interest in Alexander's will not cause Vornado to fail to
satisfy the asset tests for REIT status so long as Alexander's qualified as a
REIT for each of the taxable years beginning with its taxable year ending
December 31, 1995 and continues to so qualify. In the opinion of Shearman &
Sterling, commencing with Alexander's taxable year ended December 31, 1995,
Alexander's has been organized and operated in conformity with the requirements
for qualification and taxation as a REIT under the Internal Revenue Code, and
its proposed method of operation will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Internal Revenue
Code. In providing its opinion, Shearman & Sterling is relying upon
representations received from Alexander's.

          Since April of 1997, Vornado has also owned, through the operating
partnership, more than 10% of the voting securities of Two Penn. Vornado's
indirect ownership interest in Two Penn will not cause Vornado to fail to
satisfy the asset tests for REIT status so long as Two Penn qualifies as a REIT
for its first taxable year and each subsequent taxable year. Vornado believes
that Two Penn will also qualify as a REIT.

ANNUAL DISTRIBUTION REQUIREMENTS.

          Vornado, in order to qualify as a REIT, is required to distribute
dividends, other than capital gain dividends, to its shareholders in an amount
at least equal to (1) the sum of (a) 90% of Vornado's "real estate investment
trust taxable income", computed without regard to the dividends paid deduction
and Vornado's net capital gain, and (b) 90% of the net after-tax income, if any,
from foreclosure property minus (2) the sum of certain items of non-cash income.

          For taxable years beginning before January 1, 2001, the required
amount of distributions described above and below was 95% of the amount of
Vornado's income or gain, as the case may be.

          In addition, if Vornado disposes of any asset within 10 years of
acquiring it, Vornado will be required to distribute at least 90% of the
after-tax built-in gain, if any, recognized on the disposition of the asset.

          These distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before Vornado timely files
its tax return for the year to which they relate and if paid on or before the
first regular dividend payment after the declaration.

                                       37


          To the extent that Vornado does not distribute all of its net capital
gain or distributes at least 90%, but less than 100%, of its real estate
investment trust taxable income, as adjusted, it will have to pay tax on those
amounts at regular ordinary and capital gain corporate tax rates. Furthermore,
if Vornado fails to distribute during each calendar year at least the sum of (a)
85% of its ordinary income for that year, (b) 95% of its capital gain net income
for that year, and (c) any undistributed taxable income from prior periods,
Vornado would have to pay a 4% excise tax on the excess of the required
distribution over the amounts actually distributed.

          Vornado intends to satisfy the annual distribution requirements.

          From time to time, Vornado may not have sufficient cash or other
liquid assets to meet the 90% distribution requirement due to timing differences
between (a) when Vornado actually receives income and when it actually pays
deductible qexpenses and (b) when Vornado includes the income and deducts the
expenses in arriving at its taxable income. If timing differences of this kind
occur, in order to meet the 90% distribution requirement, Vornado may find it
necessary to arrange for short-term, or possibly long-term, borrowings or to pay
dividends in the form of taxable stock dividends.

          Under certain circumstances, Vornado may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year, which may be included in Vornado's deduction
for dividends paid for the earlier year. Thus, Vornado may be able to avoid
being taxed on amounts distributed as deficiency dividends; however, Vornado
will be required to pay interest based upon the amount of any deduction taken
for deficiency dividends.

FAILURE TO QUALIFY AS A REIT

          If Vornado fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, Vornado will have to pay tax,
including any applicable alternative minimum tax, on its taxable income at
regular corporate rates. Vornado will not be able to deduct distributions to
shareholders in any year in which it fails to qualify, nor will Vornado be
required to make distributions to shareholders. In this event, to the extent of
current and accumulated earnings and profits, all distributions to shareholders
will be taxable to the shareholders as ordinary income and corporate
distributees may be eligible for the dividends received deduction if they
satisfy the relevant provisions of the Internal Revenue Code. Unless entitled to
relief under specific statutory provisions, Vornado will also be disqualified
from taxation as a REIT for the four taxable years following the year during
which qualification was lost. Vornado might not be entitled to the statutory
relief described in this paragraph in all circumstances.

                      TAXATION OF HOLDERS OF COMMON SHARES

U.S. SHAREHOLDERS

          As used in this section, the term "U.S. shareholder" means a holder of
common shares who, for United States Federal income tax purposes, is

          -    a citizen or resident of the United States;

          -    a domestic corporation;

          -    an estate whose income is subject to United States Federal income
               taxation regardless of its source; or

          -    a trust if a United States court can exercise primary supervision
               over the trust's administration and one or more United States
               persons have authority to control all substantial decisions of
               the trust.

                                       38


          As long as Vornado qualifies as a REIT, distributions made by Vornado
out of its current or accumulated earnings and profits, and not designated as
capital gain dividends, will constitute dividends taxable to its taxable U.S.
shareholders as ordinary income. Distributions of this kind will not be eligible
for the dividends received deduction in the case of U.S. shareholders that are
corporations. Distributions made by Vornado that Vornado properly designates as
capital gain dividends will be taxable to U.S. shareholders as gain from the
sale of a capital asset held for more than one year, to the extent that they do
not exceed Vornado's actual net capital gain for the taxable year, without
regard to the period for which a U.S. shareholder has held his shares. Thus,
with certain limitations, capital gain dividends received by an individual U.S.
shareholder may be eligible for 20% or 25% capital gains rates of taxation. U.S.
shareholders that are corporations may, however, be required to treat up to 20%
of certain capital gain dividends as ordinary income.

          To the extent that Vornado makes distributions, not designated as
capital gain dividends, in excess of its current and accumulated earnings and
profits, these distributions will be treated first as a tax-free return of
capital to each U.S. shareholder. Thus, these distributions will reduce the
adjusted basis which the U.S. shareholder has in his shares for tax purposes by
the amount of the distribution, but not below zero. Distributions in excess of a
U.S. shareholder's adjusted basis in his shares will be taxable as capital
gains, provided that the shares have been held as a capital asset. For purposes
of determining the portion of distributions on separate classes of shares that
will be treated as dividends for Federal income tax purposes, current and
accumulated earnings and profits will be allocated to distributions resulting
from priority rights of preferred shares before being allocated to other
distributions.

          Dividends authorized by Vornado in October, November, or December of
any year and payable to a shareholder of record on a specified date in any of
these months will be treated as both paid by Vornado and received by the
shareholder on December 31 of that year, provided that Vornado actually pays the
dividend on or before January 31 of the following calendar year. Shareholders
may not include in their own income tax returns any net operating losses or
capital losses of Vornado.

          U.S. shareholders holding shares at the close of Vornado's taxable
year will be required to include, in computing their long-term capital gains for
the taxable year in which the last day of Vornado's taxable year falls, the
amount that Vornado designates in a written notice mailed to its shareholders.
Vornado may not designate amounts in excess of Vornado's undistributed net
capital gain for the taxable year. Each U.S. shareholder required to include the
designated amount in determining the shareholder's long-term capital gains will
be deemed to have paid, in the taxable year of the inclusion, the tax paid by
Vornado in respect of the undistributed net capital gains. U.S. shareholders to
whom these rules apply will be allowed a credit or a refund, as the case may be,
for the tax they are deemed to have paid. U.S. shareholders will increase their
basis in their shares by the difference between the amount of the includible
gains and the tax deemed paid by the shareholder in respect of these gains.

          Distributions made by Vornado and gain arising from a U.S.
shareholder's sale or exchange of shares will not be treated as passive activity
income. As a result, U.S. shareholders generally will not be able to apply any
passive losses against that income or gain.

          When a U.S. shareholder sells or otherwise disposes of shares, the
shareholder will recognize gain or loss for Federal income tax purposes in an
amount equal to the difference between (a) the amount of cash and the fair
market value of any property received on the sale or other disposition, and (b)
the holder's adjusted basis in the shares for tax purposes. This gain or loss
will be capital gain or loss if the U.S. shareholder has held the shares as a
capital asset. The gain or loss will be long-term gain or loss if the U.S.
shareholder has held the shares for more than one year. Capital gain of an
individual U.S. shareholder is generally taxed at a maximum rate of 20% where
the property is held for more than one year, and 18% where the property is held
for more than 5 years. In general, any loss recognized by a U.S. shareholder
when the shareholder sells or otherwise disposes of shares of Vornado that the
shareholder has held for six months or less, after applying certain holding
period rules, will be treated as a long-term capital loss, to the

                                       39


extent of distributions received by the shareholder from Vornado which were
required to be treated as long-term capital gains.

BACKUP WITHHOLDING.

          Vornado will report to its U.S. shareholders and the IRS the amount of
dividends paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, backup withholding may apply to a
shareholder with respect to dividends paid unless the holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. The IRS
may also impose penalties on a U.S. shareholder that does not provide Vornado
with his correct taxpayer identification number. A shareholder may credit any
amount paid as backup withholding against the shareholder's income tax
liability. In addition, Vornado may be required to withhold a portion of capital
gain distributions to any shareholders who fail to certify their non-foreign
status to Vornado.

TAXATION OF TAX-EXEMPT SHAREHOLDERS.

          The IRS has ruled that amounts distributed as dividends by a REIT
generally do not constitute unrelated business taxable income when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt shareholder
is not one of the types of entity described in the next paragraph and has not
held its shares as "debt financed property" within the meaning of the Internal
Revenue Code, and the shares are not otherwise used in a trade or business, the
dividend income from shares will not be unrelated business taxable income to a
tax-exempt shareholder. Similarly, income from the sale of shares will not
constitute unrelated business taxable income unless the tax-exempt shareholder
has held the shares as "debt financed property" within the meaning of the
Internal Revenue Code or has used the shares in a trade or business.

          Income from an investment in Vornado's shares will constitute
unrelated business taxable income for tax-exempt shareholders that are social
clubs, voluntary employee benefit associations, supplemental unemployment
benefit trusts, and qualified group legal services plans exempt from Federal
income taxation under the applicable subsections of Section 501(c) of the
Internal Revenue Code, unless the organization is able to properly deduct
amounts set aside or placed in reserve for certain purposes so as to offset the
income generated by its shares. Prospective investors of the types described in
the preceding sentence should consult their own tax advisors concerning these
"set aside" and reserve requirements.

          Notwithstanding the foregoing, however, a portion of the dividends
paid by a "pension-held REIT" will be treated as unrelated business taxable
income to any trust which

          -    is described in Section 401(a) of the Internal Revenue Code;

          -    is tax exempt under Section 501(a) of the Internal Revenue
               Code; and

          -    holds more than 10% (by value) of the equity interests in the
               REIT.

          Tax-exempt pension, profit-sharing and stock bonus funds that are
described in Section 401(a) of the Internal Revenue Code are referred to below
as "qualified trusts." A REIT is a "pension-held REIT" if:

          -    it would not have qualified as a REIT but for the fact that
               Section 856(h)(3) of the Internal Revenue Code provides that
               stock owned by qualified trusts will be treated, for purposes of
               the "not closely held" requirement, as owned by the beneficiaries
               of the trust (rather than by the trust itself); and

                                       40


          -    either (a) at least one qualified trust holds more than 25% by
               value of the interests in the REIT or (b) one or more qualified
               trusts, each of which owns more than 10% by value of the
               interests in the REIT, hold in the aggregate more than 50% by
               value of the interests in the REIT.

          The percentage of any REIT dividend treated as unrelated business
taxable income to a qualifying trust is equal to the ratio of (a) the gross
income of the REIT from unrelated trades or businesses, determined as though the
REIT were a qualified trust, less direct expenses related to this gross income,
to (b) the total gross income of the REIT, less direct expenses related to the
total gross income. A de minimis exception applies where this percentage is less
than 5% for any year. Vornado does not expect to be classified as a pension-held
REIT.

          The rules described above under the heading "U.S. shareholders"
concerning the inclusion of Vornado's designated undistributed net capital gains
in the income of its shareholders will apply to tax-exempt entities. Thus,
tax-exempt entities will be allowed a credit or refund of the tax deemed paid by
these entities in respect of the includible gains.

NON-U.S. SHAREHOLDERS

          The rules governing U.S. Federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships and estates or trusts
that in either case are not subject to United States Federal income tax on a net
income basis, which we call "non-U.S. shareholders", are complex. The following
discussion is only a limited summary of these rules. Prospective non-U.S.
shareholders should consult with their own tax advisors to determine the impact
of U.S. Federal, state and local income tax laws with regard to an investment in
common shares, including any reporting requirements.

ORDINARY DIVIDENDS.

          Distributions, other than distributions that are treated as
attributable to gain from sales or exchanges by Vornado of U.S. real property
interests, as discussed below, and other than distributions designated by
Vornado as capital gain dividends, will be treated as ordinary income to the
extent that they are made out of current or accumulated earnings and profits of
Vornado. A withholding tax equal to 30% of the gross amount of the distribution
will ordinarily apply to distributions of this kind to non-U.S. shareholders,
unless an applicable tax treaty reduces that tax. However, if income from the
investment in the shares is treated as effectively connected with the non-U.S.
shareholder's conduct of a U.S. trade or business or is attributable to a
permanent establishment that the non-U.S. shareholder maintains in the U.S. if
that is required by an applicable income tax treaty as a condition for
subjecting the non-U.S. shareholder to U.S. taxation on a net income basis, tax
at graduated rates will generally apply to the non-U.S. shareholder in the same
manner as U.S. shareholders are taxed with respect to dividends, and the 30%
branch profits tax may also apply if the shareholder is a foreign corporation.
Vornado expects to withhold U.S. tax at the rate of 30% on the gross amount of
any dividends, other than dividends treated as attributable to gain from sales
or exchanges of U.S. real property interests and capital gain dividends, paid to
a non-U.S. shareholder, unless (a) a lower treaty rate applies and the required
form evidencing eligibility for that reduced rate is filed with Vornado or the
appropriate withholding agent or (b) the non-U.S. shareholder files an IRS Form
W-8 ECI or a successor form with Vornado or the appropriate withholding agent
claiming that the distributions are effectively connected with the non-U.S.
shareholder's conduct of a U.S. trade or business.

          Distributions to a non-U.S. shareholder that are designated by Vornado
at the time of distribution as capital gain dividends which are not attributable
to or treated as attributable to the disposition by Vornado of a U.S. real
property interest generally will not be subject to U.S. Federal income taxation,
except as described below.

                                       41


RETURN OF CAPITAL.

          Distributions in excess of Vornado's current and accumulated earnings
and profits, which are not treated as attributable to the gain from Vornado's
disposition of a U.S. real property interest, will not be taxable to a non-U.S.
shareholder to the extent that they do not exceed the adjusted basis of the
non-U.S. shareholder's shares. Distributions of this kind will instead reduce
the adjusted basis of the shares. To the extent that distributions of this kind
exceed the adjusted basis of a non-U.S. shareholder's shares, they will give
rise to tax liability if the non-U.S. shareholder otherwise would have to pay
tax on any gain from the sale or disposition of its shares, as described below.
If it cannot be determined at the time a distribution is made whether the
distribution will be in excess of current and accumulated earnings and profits,
withholding will apply to the distribution at the rate applicable to dividends.
However, the non-U.S. shareholder may seek a refund of these amounts from the
IRS if it is subsequently determined that the distribution was, in fact, in
excess of current accumulated earnings and profits of Vornado.

CAPITAL GAIN DIVIDENDS.

          For any year in which Vornado qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by Vornado of U.S. real
property interests will be taxed to a non-U.S. shareholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980, as amended. Under
this statute, these distributions are taxed to a non-U.S. shareholder as if the
gain were effectively connected with a U.S. business. Thus, non-U.S.
shareholders will be taxed on the distributions at the normal capital gain rates
applicable to U.S. shareholders, subject to any applicable alternative minimum
tax and special alternative minimum tax in the case of individuals. Vornado is
required by applicable Treasury regulations under this statute to withhold 35%
of any distribution that Vornado could designate as a capital gain dividend.
However, if Vornado designates as a capital gain dividend a distribution made
before the day Vornado actually effects the designation, then although the
distribution may be taxable to a non-U.S. shareholder, withholding does not
apply to the distribution under this statute. Rather, Vornado must effect the
35% withholding from distributions made on and after the date of the
designation, until the distributions so withheld equal the amount of the prior
distribution designated as a capital gain dividend. The non-U.S. shareholder may
credit the amount withheld against its U.S. tax liability.

SALES OF SHARES.

          Gain recognized by a non-U.S. shareholder upon a sale or exchange of
common shares generally will not be taxed under the Foreign Investment in Real
Property Tax Act if Vornado is a "domestically controlled REIT", defined
generally as a REIT, less than 50% in value of whose stock is and was held
directly or indirectly by foreign persons at all times during a specified
testing period. Vornado believes that it is and will continue to be a
domestically controlled REIT, and, therefore, that taxation under this statute
generally will not apply to the sale of Vornado shares. However, gain to which
this statute does not apply will be taxable to a non-U.S. shareholder if
investment in the shares is treated as effectively connected with the non-U.S.
shareholder's U.S. trade or business or is attributable to a permanent
establishment that the non-U.S. shareholder maintains in the U.S. if that is
required by an applicable income tax treaty as a condition for subjecting the
non-U.S. shareholder to U.S. taxation on a net income basis. In this case, the
same treatment will apply to the non-U.S. shareholder as to U.S. shareholders
with respect to the gain. In addition, gain to which the Foreign Investment in
Real Property Tax Act does not apply will be taxable to a non-U.S. shareholder
if the non-U.S. shareholder is a nonresident alien individual who was present in
the United States for 183 days or more during the taxable year and has a "tax
home" in the United States, or maintains an office or a fixed place of business
in the United States to which the gain is attributable. In this case, a 30% tax
will apply to the nonresident alien individual's capital gains. A similar rule
will apply to capital gain dividends to which this statute does not apply.

          If Vornado were not a domestically controlled REIT, tax under the
Foreign Investment in Real Property Tax Act would apply to a non-U.S.
shareholder's sale of shares only if the selling non-U.S. shareholder owned more
than 5% of the class of shares sold at any time during a specified period. This

                                       42


period is generally the shorter of the period that the non-U.S. shareholder
owned the shares sold or the five-year period ending on the date when the
shareholder disposed of the shares. If tax under this statute applies to the
gain on the sale of shares, the same treatment would apply to the non-U.S.
shareholder as to U.S. shareholders with respect to the gain, subject to any
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals.

FEDERAL ESTATE TAXES.

          Common shares held by a non-U.S. shareholder at the time of death will
be included in the shareholder's gross estate for United States federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.

BACKUP WITHHOLDING AND INFORMATION REPORTING.

          If you are a non-U.S. shareholder, you are generally exempt from
backup withholding and information reporting requirements with respect to:

          -    dividend payments and

          -    the payment of the proceeds from the sale of common shares
               effected at a United States office of a broker,

as long as the income associated with these payments is otherwise exempt from
United States federal income tax, and:

          -    the payor or broker does not have actual knowledge or reason to
               know that you are a United States person and you have furnished
               to the payor or broker:

                  -    a valid Internal Revenue Service Form W-8BEN or an
                       acceptable substitute form upon which you certify, under
                       penalties of perjury, that you are a non-United States
                       person, or

                  -    other documentation upon which it may rely to treat the
                       payments as made to a non-United States person in
                       accordance with U.S. Treasury regulations, or

          -    you otherwise establish an exemption.

          Payment of the proceeds from the sale of common shares effected at a
foreign office of a broker generally will not be subject to information
reporting or backup withholding. However, a sale of common shares that is
effected at a foreign office of a broker will be subject to information
reporting and backup withholding if:

          -    the proceeds are transferred to an account maintained by you in
               the United States,

          -    the payment of proceeds or the confirmation of the sale is mailed
               to you at a United States address, or

          -    the sale has some other specified connection with the United
               States as provided in U.S. Treasury regulations,

unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption.

                                       43


          In addition, a sale of common shares will be subject to information
reporting if it is effected at a foreign office of a broker that is:

          -    a United States person,

          -    a controlled foreign corporation for United States tax purposes,

          -    a foreign person 50% or more of whose gross income is effectively
               connected with the conduct of a United States trade or business
               for a specified three-year period, or

          -    a foreign partnership, if at any time during its tax year:

                  -    one or more of its partners are "U.S. persons", as
                       defined in U.S. Treasury regulations, who in the
                       aggregate hold more than 50% of the income or capital
                       interest in the partnership, or

                  -    such foreign partnership is engaged in the conduct of a
                       United States trade or business,

unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption. Backup withholding will apply if
the sale is subject to information reporting and the broker has actual knowledge
that you are a United States person.

          You generally may obtain a refund of any amounts withheld under the
backup withholding rules that exceed your income tax liability by filing a
refund claim with the Internal Revenue Service.

                             OTHER TAX CONSEQUENCES

          State or local taxation may apply to Vornado and its shareholders in
various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of Vornado and
its shareholders may not conform to the Federal income tax consequences
discussed above. Consequently, prospective shareholders should consult their own
tax advisors regarding the effect of state and local tax laws on an investment
in Vornado.

             DESCRIPTION OF THE UNITS AND THE OPERATING PARTNERSHIP

          The following description of the material terms of the units and some
material provisions of the partnership agreement does not describe every aspect
of the units or the partnership agreement and is only a summary of, and
qualified in its entirety by reference to, applicable provisions of Delaware law
and the partnership agreement. A copy of the partnership agreement is filed as
an exhibit to the registration statement of which this prospectus is a part. See
"Where You Can Find More Information" for information about how to obtain a copy
of the partnership agreement. For a comparison of the voting rights and some
other rights of unit holders in the operating partnership and shareholders of
Vornado, see "Comparison of Ownership of Units and Common Shares."

THE OPERATING PARTNERSHIP'S OUTSTANDING CLASSES OF UNITS

          Holders of units, other than Vornado in its capacity as general
partner, hold a limited partnership interest in the operating partnership. All
holders of units, including Vornado in its capacity as general partner, are
entitled to share in cash distributions from, and in the profits and losses of,
the operating partnership.

          Holders of units have the rights to which limited partners are
entitled under the partnership agreement and the Delaware Revised Uniform
Limited Partnership Act. The units are not registered under any federal or state

                                       44


securities laws, and they are not listed on any exchange or quoted on any
national market system. The partnership agreement imposes restrictions on the
transfer of units. See "--Restrictions on Transfers of Units by Limited
Partners" below for further information about these restrictions.

          As of November 30, 2002, there were outstanding:

          -    1,471,423 series A preferred units;

          -    3,400,000 series B pass-through preferred units;

          -    4,600,000 series C pass-through preferred units;

          -    899,566 series B-1 convertible preferred units;

          -    449,783 series B-2 restricted convertible preferred units;

          -    747,912 series C-1 convertible preferred units;

          -    3,500,000 series D-1 preferred units;

          -    549,336 series D-2 preferred units;

          -    8,000,000 series D-3 preferred units;

          -    5,000,000 series D-4 preferred units;

          -    6,480,000 series D-5 preferred units;

          -    840,000 series D-6 preferred units;

          -    7,200,000 series D-7 preferred units;

          -    360,000 series D-8 preferred units;

          -    1,800,000 series D-9 preferred units;

          -    4,998,000 series E-1 convertible preferred units;

          -    400,000 series F-1 preferred units; and

          -    129,555,634 class A units, including 21,115,663 not held by
               Vornado.

DISTRIBUTIONS WITH RESPECT TO UNITS

          The partnership agreement provides for distributions, as determined in
the manner provided in the partnership agreement, to Vornado and the limited
partners in proportion to their percentage interests in the operating
partnership, subject to the distribution preferences that are described in the
next paragraph. As general partner of the operating partnership, Vornado has the
exclusive right to declare and cause the operating partnership to make
distributions as and when Vornado deems appropriate or desirable in its sole
discretion. For so long as Vornado elects to qualify as a REIT, Vornado will
make reasonable efforts, as determined by it in its sole discretion, to make
distributions to partners in amounts such that Vornado will be able to pay
shareholder dividends that will satisfy the requirements for qualification as a
REIT and avoid any federal income or excise tax liability for Vornado.

          Distributions vary among the holders of different classes of units:

                                       45


          -         The series A preferred units entitle Vornado as their holder
                    to a cumulative preferential distribution at an annual rate
                    of $3.25 per series A preferred unit, which we refer to as
                    the "series A preferred distribution preference." The series
                    A preferred units correspond to the series A preferred
                    shares of Vornado.

          -         The series B pass-through preferred units entitle Vornado as
                    their holder to a cumulative preferential distribution at an
                    annual rate of $2.125 per unit, which we call the "series B
                    pass-through preferred distribution preference." The series
                    B pass-through preferred units correspond to the series B
                    preferred shares of Vornado.

          -         The series C pass-through preferred units entitle Vornado as
                    their holder to a cumulative preferential distribution at an
                    annual rate of $2.125 per unit, which we call the "series C
                    pass-through preferred distribution preference." The series
                    C pass-through preferred units correspond to the series C
                    preferred shares of Vornado.

          -         The series B-1 convertible preferred units entitle their
                    holder to a preferential distribution at the annual rate of
                    $2.50 per unit, and the series B-2 restricted preferred
                    units entitle their holders to a preferential distribution
                    at the annual rate of $4.00 per unit. We refer to these
                    preferential distributions as the "series B-1 and B-2
                    preferred distribution preferences."

          -         The series C-1 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $3.25 per
                    unit, which we refer to as the "series C-1 preferred
                    distribution preference."

          -         The series D-1 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.125 per
                    unit, which we refer to as the "series D-1 preferred
                    distribution preference."

          -         The series D-2 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $4.1875 per
                    unit, which we refer to as the "series D-2 preferred
                    distribution preference."

          -         The series D-3 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-3 preferred
                    distribution preference."

          -         The series D-4 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-4 preferred
                    distribution preference."

          -         The series D-5 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-5 preferred
                    distribution preference."

          -         The series D-6 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-6 preferred
                    distribution preference."

          -         The series D-7 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-7 preferred
                    distribution preference."

          -         The series D-8 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-8 preferred
                    distribution preference."

          -         The series D-9 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.0625 per
                    unit, which we refer to as the "series D-9 preferred
                    distribution preference."

          -         The series E-1 preferred units entitle their holder to a
                    preferential distribution at the annual rate of (a) $3.00
                    per unit for distributions paid in respect of the period
                    from the date of issuance through, but excluding, the first
                    anniversary of that date, (b) $3.125 per unit for
                    distributions paid in respect of the period from the first
                    anniversary of the date of issuance through, but excluding,
                    the second

                                       46


                    anniversary of that date, (c) $3.25 per unit for
                    distributions paid in respect of the period from the second
                    anniversary of the date of issuance through, but excluding,
                    the seventh anniversary of the date of issuance and (d)
                    $3.375 per unit for distributions paid in respect of any
                    period thereafter. We refer to this preferential
                    distribution as the "series E-1 preferred distribution
                    preference."

          -         The series F-1 preferred units entitle their holder to a
                    preferential distribution at the annual rate of $2.25 per
                    unit, which we call the "series F-1 preferred distribution
                    preference."

          We sometimes refer to the series A preferred distribution preference,
the series B pass-through preferred distribution preference, the series C
pass-through preferred distribution preference, the series B-1 and B-2 preferred
distribution preferences, the series C-1 preferred distribution preference, the
series D-1 preferred distribution preference, the series D-2 preferred
distribution preference, the series D-3 preferred distribution preference, the
series D-4 preferred distribution preference, the series D-5 preferred
distribution preference, the series D-6 preferred distribution preference, the
series D-7 preferred distribution preference, the series D-8 preferred
distribution preference, the series D-9 preferred distribution preference, the
series E-1 preferred distribution preference and the series F-1 preferred
distribution preference as the "preferred distribution preferences."

          The value of each common unit, regardless of its class, equates to one
common share of Vornado. Preferred units do not have a value equating to one
common share, but have the liquidation preferences and conversion prices for
conversion into class A units or terms for redemption for cash or corresponding
preferred shares that are established in the partnership agreement.

          The partnership agreement provides that the operating partnership will
make distributions when, as and if declared by Vornado in the order of
preference provided for in the partnership agreement. The order of preference in
the partnership agreement provides that distributions will be paid first to
Vornado as necessary to enable Vornado to pay REIT expenses. The partnership
agreement defines "REIT expenses" to mean:

          -    costs and expenses relating to the continuity of existence of
               Vornado and any entity in which Vornado owns an equity interest;

          -    costs and expenses relating to any offer or registration of
               securities by Vornado;

          -    costs and expenses associated with preparing and filing periodic
               reports of Vornado under federal, state and local laws, including
               SEC filings;

          -    costs and expenses associated with Vornado's compliance with
               laws, rules and regulations applicable to it; and

          -    all other operating or administrative expenses incurred by
               Vornado in the ordinary course of its business.

          After the operating partnership pays Vornado distributions as
necessary to enable Vornado to pay REIT expenses, distributions will be paid:

          -    first, to holders of any class of preferred units ranking senior,
               as to distributions or redemption or voting rights, to class A
               units; and

          -    second, to holders of class A units.

RANKING OF UNITS

          The series A preferred units, series B pass-through preferred units,
series C pass-through preferred units, series D-1 preferred units, series D-2
preferred units, series D-3 preferred units, series D-4 preferred units, series
D-5 preferred units, series D-6 preferred units, series D-7 preferred units,
series D-8 preferred units, series D-9 preferred units, series E-1 convertible
preferred units and series F-1 preferred units rank senior to the class A units

                                       47


with respect to the payment of distributions and amounts upon liquidation,
dissolution or winding up of the operating partnership. The series A preferred
units, series B pass-through preferred units, series C pass-through preferred
units, series B-1 convertible preferred units, series B-2 restricted preferred
units, series C-1 preferred units, series D-1 preferred units, series D-2
preferred units, series D-3 preferred units, series D-4 preferred units, series
D-5 preferred units, series D-6 preferred units, series D-7 preferred units,
series D-8 preferred units, series D-9 preferred units, series E-1 preferred
units and any other units designated as "parity units" all rank on a parity with
each other, in each case with respect to the payment of distributions and
amounts upon liquidation, dissolution or winding up of the operating
partnership, without preference or priority of one over the other.

The series of preferred units have the following liquidation preferences:

          -    $50.00 per series A preferred unit, series B-1 convertible
               preferred unit, series B-2 restricted preferred unit, series C-1
               preferred unit, series D-2 preferred unit, and series E-1
               convertible preferred unit;

          -    $25.00 per series B pass-through preferred unit, series C
               pass-through preferred unit, series D-3 preferred unit, series
               D-4 preferred unit, series D-5 preferred unit and series F-1
               preferred unit; and

          -    an amount per series D-1 preferred unit, series D-6 preferred
               unit, series D-7 preferred unit, Series D-8 preferred unit and
               series D-9 preferred unit equal to the capital account of the
               unit. The capital account of the series D-1 preferred units,
               series D-6 preferred units, series D-7 preferred units, series
               D-8 preferred units and series D-9 preferred units is equal to an
               original capital contribution of $25.00 per unit, adjusted from
               time to time to reflect the operating partnership's income,
               gains, losses and deductions that are allocated to the units and
               actual or deemed distributions to, or capital contributions by,
               the holders of the units.

          From time to time as determined by Vornado, in its discretion, the
operating partnership may create additional series of preference units or
classes of other units senior to or on parity with the class A units with
respect to the payment of distributions and amounts upon liquidation,
dissolution or winding up of the partnership.

REDEMPTION OR CONVERSION OF UNITS

          The holders of class A units, other than Vornado or any subsidiary of
Vornado, have the right to redeem their units for cash or, at Vornado's option,
common shares. See "Redemption of Units" above for further information about
this right.

          The series A preferred units became redeemable at Vornado's option for
class A units on April 1, 2001, and are convertible at Vornado's option into
class A units at any time, provided that an equivalent number of series A
preferred shares are concurrently converted into common shares by their holders.
The number of class A units into which the series A preferred units are
redeemable or convertible is equal to the aggregate liquidation preference of
the series A preferred units being redeemed or converted divided by their
conversion price. The conversion price of the series A preferred units is now
$36.10 and may be adjusted from time to time to take account of stock dividends
and other transactions.

          The series B pass-through preferred units are redeemable at Vornado's
option for cash equal to $25.00 per unit and any accumulated and unpaid
distributions owing in respect of the series B pass-through preferred units at
any time beginning on March 17, 2004, provided that an equivalent number of
series B preferred shares are concurrently redeemed by Vornado.

          The series C pass-through preferred units are redeemable at Vornado's
option for cash equal to $25.00 per unit and any accumulated and unpaid
distributions owing in respect of the series C pass-through preferred units at
any time beginning on May 17, 2004, provided that an equivalent number of series
C preferred shares are concurrently redeemed by Vornado.

          The series B-1 convertible preferred units are redeemable at any time
beginning on January 1, 2008 at Vornado's option for a number of class A units
equal to the aggregate liquidation preference of the series B-1

                                       48


convertible preferred units of $50.00 per unit divided by the conversion price
of the series B-1 convertible preferred units of $54.7050. The series B-2
restricted preferred units are redeemable at any time beginning on January 1,
2008 at Vornado's option for cash of $50 per unit. The series B-1 convertible
preferred units and series B-2 restricted preferred units are convertible at any
time at the option of their holders in groups of two series B-1 convertible
preferred units and one series B-2 restricted preferred unit into a number of
class A units equal to the aggregate series B-1 and B-2 preferred liquidation
preferences of the units being converted divided by the conversion price of
$54.7050.

          The series C-1 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on November 24, 2003 for 1.1431 class A units per series C-1 preferred
unit, subject to anti-dilution adjustments. Holders of series C-1 preferred
units have the right to convert all or a portion of their series C-1 preferred
units at any time into class A units at the same rate.

          The series D-1 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on November 12, 2003 for cash equal to $25.00 per unit and any
accumulated and unpaid distributions owing in respect of the series D-1
preferred units being redeemed. At any time beginning on November 12, 2008, or
earlier upon the occurrence of specified events, holders of series D-1 preferred
units will have the right to have their series D-1 preferred units redeemed by
the operating partnership for either:

          -    cash equal to $25.00 for each series D-1 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-1 preferred units being redeemed; or

          -    at Vornado's option, one series D-1 8.5% cumulative redeemable
               preferred share of beneficial interest, no par value, of Vornado
               for each series D-1 preferred unit redeemed.

          The series D-2 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on May 27, 2004 for cash equal to $50.00 per unit and any accumulated
and unpaid distributions owing in respect of the series D-2 units being
redeemed. At any time beginning on May 27, 2009, or earlier upon the occurrence
of specified events, holders of series D-2 preferred units will have the right
to have their series D-2 preferred units redeemed by the operating partnership
for either:

          -    cash equal to $50.00 for each series D-2 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-2 preferred units being redeemed; or

          -    at Vornado's option, one series D-2 preferred share of Vornado
               for each series D-2 preferred unit redeemed.

          The series D-3 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on September 3, 2004 for cash equal to $25.00 per unit and any
accumulated and unpaid distributions owing in respect of the series D-3 units
being redeemed. At any time beginning on September 3, 2009, or earlier upon the
occurrence of specified events, holders of series D-3 preferred units will have
the right to have their series D-3 preferred units redeemed by the operating
partnership for either:

          -    cash equal to $25.00 for each series D-3 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-3 preferred units being redeemed; or

          -    at Vornado's option, one series D-3 preferred share of Vornado
               for each series D-3 preferred unit redeemed.

          The series D-4 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on September 3, 2004 for cash equal to $25.00 per unit and any
accumulated and unpaid distributions owing in respect of the series D-4 units
being redeemed. At any time beginning on September 3, 2009, or earlier upon the
occurrence of specified events, holders of series D-4 preferred units will have
the right to have their series D-4 preferred units redeemed by the operating
partnership for either:

                                       49


          -    cash equal to $25.00 for each series D-4 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-4 preferred units being redeemed; or

          -    at Vornado's option, one series D-4 preferred share of Vornado
               for each series D-4 preferred unit redeemed.

          The series D-5 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on November 24, 2004 for cash equal to $25.00 per unit and any
accumulated and unpaid distributions owing in respect of the series D-5 units
being redeemed. At any time beginning on November 24, 2009, or earlier upon the
occurrence of specified events, holders of series D-5 preferred units will have
the right to have their series D-5 preferred units redeemed by the operating
partnership for either:

          -    cash equal to $25.00 for each series D-5 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-5 preferred units being redeemed; or

          -    at Vornado's option, one series D-5 preferred share of Vornado
               for each series D-5 preferred unit redeemed.

          The series D-6 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on May 1, 2005 for cash equal to $25.00 per unit and any accumulated
and unpaid distributions owing in respect of the series D-6 units being
redeemed. At any time beginning on May 1, 2010, or earlier upon the occurrence
of specified events, holders of series D-6 preferred units will have the right
to have their series D-6 preferred units redeemed by the operating partnership
for either:

          -    cash equal to $25.00 for each series D-6 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-6 preferred units being redeemed; or

          -    at Vornado's option, one series D-6 preferred share of Vornado
               for each series D-6 preferred unit redeemed.

          The series D-7 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on May 25, 2005 for cash equal to $25.00 per unit and any accumulated
and unpaid distributions owing in respect of the series D-7 units being
redeemed. At any time beginning on May 25, 2010, or earlier upon the occurrence
of specified events, holders of series D-7 preferred units will have the right
to have their series D-7 preferred units redeemed by the operating partnership
for either:

          -    cash equal to $25.00 for each series D-7 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-7 preferred units being redeemed; or

          -    at Vornado's option, one series D-7 preferred share of Vornado
               for each series D-7 preferred unit redeemed.

          The series D-8 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on May 1, 2005 for cash equal to $25.00 per unit and any accumulated
and unpaid distributions owing in respect of the series D-8 units being
redeemed. At any time beginning on May 1, 2010, or earlier upon the occurrence
of specified events, holders of series D-8 preferred units will have the right
to have their series D-8 preferred units redeemed by the operating partnership
for either:

          -    cash equal to $25.00 for each series D-8 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-8 preferred units being redeemed; or

          -    at Vornado's option, one series D-8 preferred share of Vornado
               for each series D-8 preferred unit redeemed.

                                       50


          The series D-9 preferred units are perpetual and may be redeemed
without penalty in whole or in part by the operating partnership at any time
beginning on September 21, 2006 for cash equal to $25.00 per unit and any
accumulated and unpaid distributions owing in respect of the series D-9 units
being redeemed. At any time beginning on September 21, 2011, or earlier upon the
occurrence of specified events, holders of series D-9 preferred units will have
the right to have their series D-9 preferred units redeemed by the operating
partnership for either:

          -    cash equal to $25.00 for each series D-9 preferred unit and any
               accumulated and unpaid distributions owing in respect of the
               series D-9 preferred units being redeemed; or

          -    at Vornado's option, one series D-9 preferred share of Vornado
               for each series D-9 preferred unit redeemed.

          The series E-1 convertible preferred units are redeemable at any time
beginning on March 3, 2004 at Vornado's option for cash equal to $50.00 for each
series E-1 convertible preferred unit and any accumulated and unpaid
distributions owing in respect of the series E-1 convertible preferred units
being redeemed. Since May 1, 2000, holders of series E-1 convertible preferred
units have had the right to have their series E-1 convertible preferred units
redeemed by the operating partnership for either:

          -    a number of class A units equal to the aggregate liquidation
               preferences of the series E-1 convertible preferred units being
               converted divided by the conversion price of $44.00, subject to
               customary antidilution adjustments; or

          -    at the holder's option, cash equal to that same number of class A
               units multiplied by the value on the redemption date of one
               common share.

          However, if a holder of series E-1 convertible preferred units elects
to have its series E-1 convertible preferred units redeemed by the operating
partnership for cash as described above, we, in our sole and absolute
discretion, may elect to satisfy this redemption right by delivering to such
holder the same number of common shares as class A units required to be
delivered by the operating partnership or the same amount of cash as required to
be delivered by the operating partnership.

          The operating partnership may redeem the series F-1 units on the first
business day in January 2012 for class A units in an amount equal to the
quotient of (a) the sum of the aggregate liquidation preference of the series
F-1 units being redeemed and all accrued and unpaid distributions, divided by
(b) the product of the value of a common share of Vornado and the applicable
conversion factor, which is currently one. The holder of series F-1 preferred
units has the right to have the units redeemed for either cash in an amount
equal to the sum of the aggregate liquidation preference of the series F-1 units
being redeemed plus any accumulated and unpaid distributions or, at Vornado's
option subject to certain limitations, common shares in an amount equal to the
amount of class A units described in the preceding sentence.

FORMATION OF THE OPERATING PARTNERSHIP

          The operating partnership was formed as a limited partnership under
the Delaware Revised Uniform Limited Partnership Act on October 2, 1996. Vornado
is the sole general partner of, and owned approximately 79% of the common
limited partnership interest in, the operating partnership at December 9, 2002.

PURPOSES, BUSINESS AND MANAGEMENT OF THE OPERATING PARTNERSHIP

          The purpose of the operating partnership includes the conduct of any
business that may be lawfully conducted by a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act, except that the
partnership agreement requires the business of the operating partnership to be
conducted in a manner that will permit Vornado to be classified as a REIT under
Section 856 of the Internal Revenue Code, unless Vornado ceases to qualify as a
REIT for any reason. In furtherance of its business, the operating partnership
may enter into partnerships, joint ventures, limited liability companies or
similar arrangements and may own interests in any other entity engaged, directly
or indirectly, in any of the foregoing.

                                       51


          Vornado, as the general partner of the operating partnership, has the
exclusive power and authority to conduct the business of the operating
partnership, except that the consent of the limited partners is required in some
limited circumstances discussed under "--Meetings and Voting" below. No limited
partner may take part in the operation, management or control of the business of
the operating partnership by virtue of being a holder of units.

          In particular, the limited partners expressly acknowledge in the
partnership agreement that the general partner is acting on behalf of the
operating partnership and Vornado's shareholders collectively, and is under no
obligation to consider the tax consequences to, or other separate interests of,
limited partners when making decisions on behalf of the operating partnership.
Except as required by lockup agreements, Vornado intends to make decisions in
its capacity as general partner of the operating partnership taking into account
the interests of Vornado and the operating partnership as a whole, independent
of the tax effects on the limited partners. See "--Borrowing by the Operating
Partnership" below for a discussion of lockup agreements. Vornado and its
trustees and officers will have no liability to the operating partnership or to
any partner or assignee for any losses sustained, liabilities incurred or
benefits not derived as a result of errors in judgment or mistakes of fact or
law or any act or omission if Vornado acted in good faith.

ABILITY OF VORNADO TO ENGAGE IN OTHER BUSINESSES; CONFLICTS OF INTEREST

          Vornado generally may not conduct any business other than through the
operating partnership without the consent of the holders of a majority of the
common limited partnership interests, excluding the limited partnership
interests held by Vornado. Other persons including officers, trustees,
employees, agents and other affiliates of Vornado are not prohibited under the
partnership agreement from engaging in other business activities and are not
required to present any business opportunities to the operating partnership. In
addition, the partnership agreement does not prevent another person or entity
that acquires control of Vornado in the future from conducting other businesses
or owning other assets, even though those businesses or assets may be ones that
it would be in the best interests of the limited partners for the operating
partnership to own.

BORROWING BY THE OPERATING PARTNERSHIP

          Vornado is authorized to cause the operating partnership to borrow
money and to issue and guarantee debt as it deems necessary for the conduct of
the activities of the operating partnership. The operating partnership's debt
may be secured by mortgages, deeds of trust, liens or encumbrances on the
operating partnership's properties. Vornado also may cause the operating
partnership to borrow money to enable the operating partnership to make
distributions, including distributions in an amount sufficient to permit Vornado
to avoid the payment of any federal income tax.

          From time to time in connection with acquisitions of properties or
other assets in exchange for limited partner interests in the operating
partnership, Vornado and the operating partnership have entered into contractual
arrangements that impose restrictions on the operating partnership's ability to
sell, finance, refinance and, in some instances, pay down existing financing on
certain of the operating partnership's properties or other assets. These
arrangements are sometimes referred to as "lockup agreements" and include, for
example, arrangements in which the operating partnership agrees that it will not
sell the property or other assets in question for a period of years unless the
operating partnership also pays the contributing partner a portion of the
federal income tax liability that will accrue to that partner as a result of the
sale. Arrangements of this kind may significantly reduce the operating
partnership's ability to sell, finance or repay indebtedness secured by the
subject properties or assets. Vornado expects to cause the operating partnership
to continue entering into transactions of this type in the future and may do so
without obtaining the consent of any partners in the operating partnership.

REIMBURSEMENT OF VORNADO; TRANSACTIONS WITH VORNADO AND ITS AFFILIATES

          Vornado does not receive any compensation for its services as general
partner of the operating partnership. Vornado, however, as a partner in the
operating partnership, has the same right to allocations and distributions with
respect to the units it holds as other partners in the operating partnership
holding the same classes of units. In addition, the operating partnership
reimburses Vornado for all expenses it incurs relating to the ongoing operation
of Vornado and any offering of additional partnership interests in the operating
partnership, securities of Vornado or rights, options, warrants or convertible
or exchangeable securities, including expenses in connection with this

                                       52


registration of common shares for issuance in exchange for units if Vornado
assumes the obligation to redeem units and elects to redeem them for common
shares instead of cash when a limited partner in the operating partnership
exercises the right to redeem units. See "Redemption of Units" above for further
information about the right to redeem units.

          Except as expressly permitted by the partnership agreement, the
operating partnership will not, directly or indirectly, sell, transfer or convey
any property to, or purchase any property from, or borrow funds from, or lend
funds to, any partner in the operating partnership or any affiliate of the
operating partnership or Vornado that is not also a subsidiary of the operating
partnership, except in a transaction that has been approved by a majority of the
disinterested trustees of Vornado, taking into account the fiduciary duties of
Vornado to the limited partners of the operating partnership.

LIABILITY OF VORNADO AND LIMITED PARTNERS

          Vornado, as general partner of the operating partnership, is liable
for all general recourse obligations of the operating partnership to the extent
not paid by the operating partnership. Vornado is not liable for the nonrecourse
obligations of the operating partnership.

          The limited partners in the operating partnership are not required to
make additional contributions to the operating partnership. Assuming that a
limited partner does not take part in the control of the business of the
operating partnership and otherwise complies with the provisions of the
partnership agreement, the liability of a limited partner for obligations of the
operating partnership under the partnership agreement and the Delaware Revised
Uniform Limited Partnership Act will be limited, with some exceptions, generally
to the loss of the limited partner's investment in the operating partnership
represented by his or her units. Under the Delaware Revised Uniform Limited
Partnership Act, a limited partner may not receive a distribution from the
operating partnership if, at the time of the distribution and after giving
effect to the distribution, the liabilities of the operating partnership, other
than liabilities to parties on account of their interests in the operating
partnership and liabilities for which recourse is limited to specified property
of the operating partnership, exceed the fair value of the operating
partnership's assets, other than the fair value of any property subject to
nonrecourse liabilities of the operating partnership, but only to the extent of
such liabilities. The Delaware Revised Uniform Limited Partnership Act provides
that a limited partner who receives a distribution knowing at the time that it
violates the foregoing prohibition is liable to the operating partnership for
the amount of the distribution. Unless otherwise agreed, a limited partner in
the circumstances described in the preceding sentence will not be liable for the
return of the distribution after the expiration of three years from the date of
the distribution.

          The operating partnership has qualified to conduct business in the
State of New York and may qualify in certain other jurisdictions. Maintenance of
limited liability status may require compliance with legal requirements of those
jurisdictions and some other jurisdictions. Limitations on the liability of a
limited partner for the obligations of a limited partnership have not been
clearly established in many jurisdictions. Accordingly, if it were determined
that the right, or exercise of the right by the limited partners, to make some
amendments to the partnership agreement or to take other action under the
partnership agreement constituted "control" of the operating partnership's
business for the purposes of the statutes of any relevant jurisdiction, the
limited partners might be held personally liable for the operating partnership's
obligations.

EXCULPATION AND INDEMNIFICATION OF VORNADO

          The partnership agreement generally provides that Vornado, as general
partner of the operating partnership, will incur no liability to the operating
partnership or any limited partner for losses sustained, liabilities incurred or
benefits not derived as a result of errors in judgment or mistakes of fact or
law or any act or omission, if Vornado acted in good faith. In addition, Vornado
is not responsible for any misconduct or negligence on the part of its agents,
provided Vornado appointed those agents in good faith. Vornado may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisors, and any action it takes or omits to
take in reliance upon the opinion of those persons, as to matters that Vornado
reasonably believes to be within their professional or expert competence, will
be conclusively presumed to have been done or omitted in good faith and in
accordance with the opinion of those persons.

                                       53


          The partnership agreement also provides for indemnification of
Vornado, the trustees and officers of Vornado and any other persons that Vornado
may from time to time designate against any and all losses, claims, damages,
liabilities, expenses, judgments, fines, settlements and other amounts incurred
by an indemnified person in connection with any proceeding and related to the
operating partnership or Vornado, the formation and operations of the operating
partnership or Vornado or the ownership of property by the operating partnership
or Vornado, unless it is established by a final determination of a court of
competent jurisdiction that:

          -    the act or omission of the indemnified person was material to the
               matter giving rise to the proceeding and either was committed in
               bad faith or was the result of active and deliberate dishonesty;

          -    the indemnified person actually received an improper personal
               benefit in money, property or services; or

          -    in the case of any criminal proceeding, the indemnified person
               had reasonable cause to believe that the act or omission was
               unlawful.

SALES OF ASSETS

          Under the partnership agreement, Vornado generally has the exclusive
authority to determine whether, when and on what terms assets of the operating
partnership will be sold, as long as any sale of a property covered by a lockup
agreement complies with those provisions. The partnership agreement prohibits
Vornado from engaging in any merger, consolidation or other combination with or
into another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of the terms of any outstanding
common shares unless, in connection with the transaction, all limited partners
other than Vornado and entities controlled by Vornado will have the right to
elect to receive, or will receive, for each unit an amount of cash, securities
or other property equal to the conversion factor multiplied by the greatest
amount of cash, securities or other property paid to a holder of shares of
beneficial interest of Vornado, if any, corresponding to that unit in
consideration of one share of that kind. We refer to transactions described in
the preceding sentence as "termination transactions." The conversion factor is
initially 1.0, but will be adjusted as necessary to prevent dilution or
inflation of the interests of limited partners that would result if Vornado were
to pay a dividend on its outstanding shares of beneficial interest in shares of
beneficial interest, subdivide its outstanding shares of beneficial interest or
combine its outstanding shares of beneficial interest into a smaller number of
shares, in each case without a corresponding issuance to, or redemption or
exchange of interests held by, limited partners in the operating partnership.

          See "--Borrowing by the Operating Partnership" above for information
about lockup agreements which limit our ability to sell some of our properties.

REMOVAL OF THE GENERAL PARTNER; TRANSFER OF VORNADO'S INTERESTS

          The partnership agreement provides that the limited partners may not
remove Vornado as general partner of the operating partnership with or without
cause. The partnership agreement also generally prohibits Vornado from
withdrawing as general partner of the operating partnership or transferring any
of its interests in the operating partnership to any other person, except in
each case, in connection with a termination transaction. In addition, the
partnership agreement prohibits Vornado from engaging in any termination
transaction unless all limited partners other than Vornado and entities
controlled by Vornado will have the right in the termination transaction to
elect to receive, or will receive, for each unit an amount of cash, securities
or other property equal to the conversion factor multiplied by the greatest
amount of cash, securities or other property paid to a holder of shares of
beneficial interest of Vornado, if any, corresponding to that unit in
consideration of one share of Vornado. The lock-up provisions and the gross-up
provisions do not apply to a sale or other transfer by Vornado of its interests
as a partner in the operating partnership, but they would apply to transfers of
assets of the operating partnership undertaken during the period when the
lock-up agreements are in effect as part of any sale or other transfer by
Vornado of its interests as a partner in the operating partnership. See
"--Borrowing by the Operating Partnership" for a description of the restrictions
on transfers of assets under the lock-up agreements.

                                       54


          The partnership agreement does not prevent a transaction in which
another entity acquires control or all of the shares of Vornado nor does it
prevent any holder of interests in Vornado from owning assets or conducting
businesses outside of the operating partnership.

RESTRICTIONS ON TRANSFERS OF UNITS BY LIMITED PARTNERS

          A limited partner, other than Vornado, some members of the Mendik
group and FW/Mendik REIT, is permitted to transfer all or any portion of his or
her units without restriction, provided that the limited partner obtains
Vornado's prior written consent, which Vornado may withhold only if (a) it
determines in its sole discretion exercised in good faith that the transfer
would cause the operating partnership or any or all of the partners other than
the partner seeking to make the transfer to incur tax liability and (b) if it
determines that any of the circumstances referred to in the next paragraph
exist. In addition, limited partners other than Vornado or any subsidiary of
Vornado are permitted to dispose of their units by exercising their right to
redeem units as described under "Redemption of Units" above.

          Vornado may withhold its consent to any proposed transfer (including
any sale, assignment, gift, pledge, encumbrance or other disposition by law or
otherwise, and including any redemption pursuant to the redemption rights
described under "-- Redemption or Conversion of Units" above) for a variety of
reasons set forth in Article XI of the partnership agreement. These reasons
include, without limitation, a determination by Vornado, in its sole and
absolute discretion, that the transfer in question would (i) cause a termination
of the operating partnership for tax purposes, (ii) cause the operating
partnership to become a "party-in-interest" or a "disqualified person" with
respect to any employee benefit plan subject to ERISA, (iii) cause the operating
partnership to become a publicly-traded partnership (as defined in Section
469(k)(2) or Section 7704 of the Internal Revenue Code), (iv) cause the
operating partnership to become subject to regulation under the Investment
Company Act of 1940 or ERISA, (v) adversely affect the ability of Vornado to
continue to qualify as a REIT or (vi) subject Vornado or the operating
partnership to any additional taxes under Section 857 or Section 4981 of the
Internal Revenue Code. In addition, no partner of the operating partnership may
pledge or transfer any of its units to a lender to the operating partnership or
any person who is related (within the meaning of Section 1.752-4(b) of the
Treasury regulations) to any lender to the operating partnership whose loan
constitutes a nonrecourse liability without the consent of Vornado, in its sole
and absolute discretion, and without entering into an agreement with Vornado as
described in the partnership agreement.

          Transfers of operating partnership units (other than "private
transfers" as defined in the regulations under the Internal Revenue Code) are
limited in any one taxable year of the operating partnership to 2% of the
interests in capital or profits not held by Vornado or certain of its
affiliates, and Vornado has the right and currently intends to refuse to permit
any attempted transfer of operating partnership units by a holder of such units
that, when aggregated with prior redemptions and transfers by other holders of
operating partnership units, would exceed this limit. In addition, redemptions
of operating partnership units by the operating partnership pursuant to the
redemption right of such units and transfers of operating partnership units to
Vornado as a result of the assumption and performance by Vornado of the
operating partnership's obligation with respect to the redemption right of
units, together with other transfers and redemptions (other than certain of the
redemptions or transfers qualifying as "private transfers" under the regulations
under Section 7704 of the Internal Revenue Code), are limited in any one taxable
year to 10% of the interests in capital or profits not held by Vornado or
certain of its affiliates, and Vornado has the right and currently intends to
refuse to permit certain redemptions and other transfers of operating
partnership units that, when aggregated with prior redemptions and transfers,
would exceed this limit.

          Any permitted transferee of units may become a substituted limited
partner only with the consent of Vornado, and Vornado may withhold its consent
in its sole and absolute discretion. If Vornado does not consent to the
admission of a transferee of units as a substituted limited partner, then the
transferee will succeed to the economic rights and benefits attributable to the
units, including the right to redeem units, but will not become a limited
partner or possess any other rights of limited partners, including the right to
vote.

                                       55


NO WITHDRAWAL BY LIMITED PARTNERS

          No limited partner has the right to withdraw from or reduce his or her
capital contribution to the operating partnership, except as a result of the
redemption, exchange or transfer of units under the terms of the partnership
agreement.

ISSUANCE OF LIMITED PARTNERSHIP INTERESTS

          Vornado is authorized, without the consent of the limited partners, to
cause the operating partnership to issue limited partnership interests to
Vornado, to the limited partners and to other persons for the consideration and
upon the terms and conditions that Vornado deems appropriate. The operating
partnership also may issue partnership interests in different series or classes.
Units may be issued to Vornado only if Vornado issues shares of beneficial
interest and contributes to the operating partnership the proceeds received by
Vornado from the issuance of the shares. Consideration for partnership interests
may be cash or any property or other assets permitted by the Delaware Revised
Uniform Limited Partnership Act. Except to the extent expressly granted by
Vornado on behalf of the partnership pursuant to another agreement, no limited
partner has preemptive, preferential or similar rights with respect to capital
contributions to the operating partnership or the issuance or sale of any
partnership interests.

MEETINGS AND VOTING

          Meetings of the limited partners may be proposed and called only by
Vornado. Limited partners may vote either in person or by proxy at meetings. Any
action that is required or permitted to be taken by the limited partners may be
taken either at a meeting of the limited partners or without a meeting if
consents in writing stating the action so taken are signed by limited partners
owning not less than the minimum number of units that would be necessary to
authorize or take the action at a meeting of the limited partners at which all
limited partners entitled to vote on the action were present. On matters in
which limited partners are entitled to vote, each limited partner, including
Vornado to the extent it holds units, will have a vote equal to the number of
common units he or she holds. At this time, there is no voting preference among
the classes of common units. The preferred units have no voting rights, except
as required by law or the terms of a particular series of preferred units. A
transferee of units who has not been admitted as a substituted limited partner
with respect to his or her transferred units will have no voting rights with
respect to those units, even if the transferee holds other units as to which he
or she has been admitted as a limited partner, and units owned by the transferee
will be deemed to be voted on any matter in the same proportion as all other
interests held by limited partners are voted. The partnership agreement does not
provide for annual meetings of the limited partners, and Vornado does not
anticipate calling such meetings.

AMENDMENT OF THE PARTNERSHIP AGREEMENT

          Amendments to the partnership agreement may be proposed only by
Vornado. Vornado generally has the power, without the consent of any limited
partners, to amend the partnership agreement as may be required to reflect any
changes to the agreement that Vornado deems necessary or appropriate in its sole
discretion, provided that the amendment does not adversely affect or eliminate
any right granted to a limited partner that is protected by the special voting
provisions described below. Limitations on Vornado's power to amend the
partnership agreement are described below.

          The partnership agreement provides that it generally may not be
amended with respect to any partner adversely affected by the amendment without
the consent of that partner if the amendment would:

          -    convert a limited partner's interest into a general partner's
               interest;

          -    modify the limited liability of a limited partner;

          -    amend Section 7.11.A, which prohibits Vornado from taking any
               action in contravention of an express prohibition or limitation
               in the partnership agreement without the written consent of all
               partners adversely affected by the action or any lower percentage
               of the limited partnership interests that may

                                       56


               be specifically provided for in the partnership agreement or
               under the Delaware Revised Uniform Limited Partnership Act;

          -    amend Article V, which governs distributions, Article VI, which
               governs allocations of income and loss for capital account
               purposes, or Section 13.2.A(3), which provides for distributions,
               after payment of partnership debts, among partners according to
               their capital accounts upon a winding up of the operating
               partnership;

          -    amend Section 8.6, which provides redemption rights; or

          -    amend the provision being described in this paragraph.

          In addition, except with the consent of a majority of the common
limited partners, excluding Vornado and entities controlled by Vornado, Vornado
may not amend:

          -    Section 4.2.A, which authorizes issuance of additional limited
               partnership interests;

          -    Section 5.1.C, which requires that if Vornado is not a REIT or a
               publicly traded entity it must for each taxable year make cash
               distributions equal to at least 95% of the operating
               partnership's taxable income;

          -    Section 7.5, which prohibits Vornado from conducting any business
               other than in connection with the ownership of interests in the
               operating partnership except with the consent of a majority of
               the common limited partners, excluding Vornado and any entity
               controlled by Vornado;

          -    Section 7.6, which limits the operating partnership's ability to
               enter transactions with affiliates;

          -    Section 7.8, which establishes limits on Vornado's liabilities to
               the operating partnership and the limited partners;

          -    Section 11.2, which limits Vornado's ability to transfer its
               interests in the operating partnership;

          -    Section 13.1, which describes the manner and circumstances in
               which the operating partnership will be dissolved;

          -    Section 14.1.C, which establishes the limitations on amendments
               being described in this paragraph; or

          -    Section 14.2, which establishes the rules governing meetings of
               partners.

          In addition, any amendment that would affect those lockup agreements
that are part of the partnership agreement requires the consent of 75% of the
limited partners benefited by those lockup agreements, with some exceptions. See
"--Borrowing by the Operating Partnership" above for information about the
lockup agreements.

BOOKS AND REPORTS

          Vornado is required to keep the operating partnership's books and
records at the principal office of the operating partnership. The books of the
operating partnership are required to be maintained for financial and tax
reporting purposes on an accrual basis in accordance with generally accepted
accounting principles, which we refer to as "GAAP." The limited partners have
the right, with some limitations, to receive copies of the most recent annual
and quarterly reports filed with the SEC by Vornado, the operating partnership's
federal, state and local income tax returns, a list of limited partners, the
partnership agreement and the partnership certificate and all amendments to the
partnership certificate. Vornado may keep confidential from the limited partners
any information that Vornado believes to be in the nature of trade secrets or
other information whose disclosure Vornado in good

                                       57


faith believes is not in the best interests of the operating partnership or
which the operating partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.

          Vornado will furnish to each limited partner, no later than the date
on which Vornado mails its annual report to its shareholders, an annual report
containing financial statements of the operating partnership, or of Vornado, if
Vornado prepares consolidated financial statements including the operating
partnership, for each fiscal year, presented in accordance with GAAP. The
financial statements will be audited by a nationally recognized firm of
independent public accountants selected by Vornado. In addition, if and to the
extent that Vornado mails quarterly reports to its shareholders, Vornado will
furnish to each limited partner, no later than the date on which Vornado mails
the quarterly reports to its shareholders, a report containing unaudited
financial statements of the operating partnership, or of Vornado, if the reports
are prepared on a consolidated basis, as of the last day of the quarter and any
other information that may be required by applicable law or regulation or that
Vornado deems appropriate.

          The operating partnership is presently subject to the informational
requirements of the Exchange Act, and in accordance therewith, files reports and
other information with the SEC. Such reports and other information are also
available from the Public Reference Rooms of the SEC at prescribed rates and
from the SEC's web site on the World Wide Web (http://www.sec.gov).

          Vornado will use reasonable efforts to furnish to each limited
partner, within 90 days after the close of each taxable year, the tax
information reasonably required by the limited partners for Federal and state
income tax reporting purposes.

POWER OF ATTORNEY

          Under the terms of the partnership agreement, each limited partner and
each assignee appoints Vornado, any liquidator, and the authorized officers and
attorneys-in-fact of each, as the limited partner's or assignee's
attorney-in-fact to do the following:

          -    to execute, swear to, acknowledge, deliver, file and record in
               the appropriate public offices (a) all certificates, documents
               and other instruments including, among other things, the
               partnership agreement and the certificate of limited partnership
               and all amendments or restatements of the certificate of limited
               partnership that Vornado or any liquidator deems appropriate or
               necessary to form, qualify or maintain the existence of the
               operating partnership as a limited partnership in the State of
               Delaware and in all other jurisdictions in which the operating
               partnership may conduct business or own property, (b) all
               instruments that Vornado or any liquidator deems appropriate or
               necessary to reflect any amendment or restatement of the
               partnership agreement in accordance with its terms, (c) all
               conveyances and other instruments that Vornado or any liquidator
               deems appropriate or necessary to reflect the dissolution and
               liquidation of the operating partnership under the terms of the
               partnership agreement, (d) all instruments relating to the
               admission, withdrawal, removal or substitution of any partner,
               any transfer of units or the capital contribution of any partner
               and (e) all certificates, documents and other instruments
               relating to the determination of the rights, preferences and
               privileges of partnership interests; and

          -    to execute, swear to, acknowledge and file all ballots, consents,
               approvals, waivers, certificates and other instruments
               appropriate or necessary, in the sole and absolute discretion of
               Vornado or any liquidator, to make, evidence, give, confirm or
               ratify any vote, consent, approval, agreement or other action
               which is made or given by the partners under the partnership
               agreement or is consistent with the terms of the partnership
               agreement or appropriate or necessary, in the sole discretion of
               Vornado or any liquidator, to effectuate the terms or intent of
               the partnership agreement.

          The partnership agreement provides that this power of attorney is
irrevocable, will survive the subsequent incapacity of any limited partner and
the transfer of all or any portion of the limited partner's or assignee's units
and will extend to the limited partner's or assignee's heirs, successors,
assigns and personal representatives.

                                       58


DISSOLUTION, WINDING UP AND TERMINATION

          The operating partnership will continue until December 31, 2095, as
this date may be extended by Vornado in its sole discretion, unless sooner
dissolved and terminated. The operating partnership will be dissolved before the
expiration of its term, and its affairs wound up upon the occurrence of the
earliest of:

          -    the withdrawal of Vornado as general partner without the
               permitted transfer of Vornado's interest to a successor general
               partner, except in some limited circumstances;

          -    the sale of all or substantially all of the operating
               partnership's assets and properties, subject to the lock-up
               agreements during the period when the lock-up agreements are in
               effect;

          -    the entry of a decree of judicial dissolution of the operating
               partnership under the provisions of the Delaware Revised Uniform
               Limited Partnership Act;

          -    the entry of a final non-appealable order for relief in a
               bankruptcy proceeding of the general partner, or the entry of a
               final non-appealable judgment ruling that the general partner is
               bankrupt or insolvent, except that, in either of these cases, in
               some circumstances the limited partners other than Vornado may
               vote to continue the operating partnership and substitute a new
               general partner in place of Vornado; or

          -    after December 31, 2046, on election by Vornado, in its sole and
               absolute discretion.

Upon dissolution, Vornado, as general partner, or any liquidator will proceed to
liquidate the assets of the operating partnership and apply the proceeds from
the liquidation in the order of priority provided in the partnership agreement.

               COMPARISON OF OWNERSHIP OF UNITS AND COMMON SHARES

          The information below highlights a number of the significant
differences and similarities between the operating partnership and Vornado
relating to, among other things, form of organization, investment objectives,
policies and restrictions, asset diversification, capitalization, management
structure, duties, liability, exculpation and indemnification of the general
partner and the trustees and investor voting and other rights. These comparisons
are intended to assist you in understanding how your investment will be changed
if you redeem your units and Vornado exercises its right to assume the operating
partnership's obligation with respect to the redemption and to acquire the units
in exchange for common shares. See "Redemption of Units" for a description of
your right to have your units redeemed and Vornado's right to redeem the units
for common shares instead of cash. THE DISCUSSION BELOW IS ONLY A SUMMARY OF
THESE MATTERS, AND YOU SHOULD CAREFULLY REVIEW THE BALANCE OF THIS PROSPECTUS
FOR ADDITIONAL IMPORTANT INFORMATION.

                        FORM OF ORGANIZATION AND PURPOSES

                            THE OPERATING PARTNERSHIP

          The operating partnership is a limited partnership organized under the
laws of the State of Delaware. The operating partnership owns interests in
office building properties, shopping center properties, temperature controlled
logistics facilities, trade showroom properties, industrial/warehouse properties
and various other properties and investments. See "Vornado and the Operating
Partnership" for further information about the operating partnership's assets.
The operating partnership may also invest in other types of real estate and in
any geographic areas that Vornado deems appropriate. Vornado conducts the
business of the operating partnership in a manner intended to permit Vornado to
be classified as a REIT under the Internal Revenue Code.

                                      VORNADO

          Vornado is a Maryland real estate investment trust organized under the
Maryland REIT law. Although Vornado currently intends to continue to qualify as
a REIT under the Internal Revenue Code and to operate as a self-administered
REIT, Vornado is not under any contractual obligation to continue to qualify as
a REIT and Vornado may discontinue this qualification or mode of operation in
the future. Although Vornado has no intention of ceasing to qualify as a REIT,
some other real estate companies that previously operated as REITs have chosen
to cease to qualify as REITs. Except as otherwise permitted in the partnership
agreement,

                                       59


                                    VORNADO

Vornado is obligated to conduct its activities through the operating
partnership. Vornado is the sole general partner of the operating partnership.

                              NATURE OF INVESTMENT

                           THE OPERATING PARTNERSHIP

          The units constitute equity interests entitling each limited partner
in the operating partnership to his or her proportional share of cash
distributions made to the limited partners in the operating partnership,
consistent with the class preferences provided for in the partnership agreement.
See "Description of the Units and the Operating Partnership--Distributions with
Respect to Units" for further information about distributions to limited
partners. The units entitle their holders to participate in the growth and
income of the operating partnership. The partnership agreement grants Vornado
discretion to determine the frequency and amount of distributions by the
operating partnership. The operating partnership and thus Vornado generally
expect to retain and reinvest proceeds of any sale of property and refinancings,
except in some limited circumstances. Thus, limited partners in the operating
partnership will not be able to realize upon their investments through
distributions of sale and refinancing proceeds. Instead, limited partners will
be able to realize upon their investments primarily by redeeming units and, if
Vornado issues common shares in exchange for redeemed units, by subsequently
selling the common shares.

                                    VORNADO

          The common shares constitute equity interests in Vornado. Vornado is
entitled to receive its proportionate share of distributions made by the
operating partnership with respect to the class A units owned by it. Each holder
of common shares of Vornado is entitled to his or her proportionate share of any
dividends or distributions paid with respect to those common shares, and these
distributions will generally match distributions made in respect of class A
units. The dividends payable to holders of common shares are not fixed in amount
and are only paid if, when and as authorized by the Board of Trustees and
declared by Vornado out of assets legally available to pay dividends. If any
preferred shares are at the time outstanding, dividends on the common shares and
other distributions, including purchases by Vornado of common shares, may be
made only if full cumulative dividends have been declared and paid on the
outstanding preferred shares or set aside for payment and there are no
arrearages in any mandatory sinking fund on outstanding preferred shares. To
qualify as a REIT, Vornado must distribute to its shareholders at least 90% of
its taxable income excluding capital gains, and corporate income tax will apply
to any taxable income including capital gains not distributed.

                              LENGTH OF INVESTMENT

                            THE OPERATING PARTNERSHIP

          The operating partnership has a stated term expiring on December 31,
2095, which can be extended by Vornado in its sole discretion. The operating
partnership has no specific plans for disposition of its assets. To the extent
that the operating partnership sells or refinances its assets, the net proceeds
from the sale or refinancing generally will be retained by the operating
partnership for working capital and new investments rather than being
distributed to its partners, including Vornado, except that Vornado currently
expects that it generally will distribute the capital gains portion of proceeds
it receives from the sale of properties. The operating partnership constitutes a
vehicle for taking advantage of future investment opportunities that may be
available in the real estate market. The operating partnership generally will
reinvest the proceeds of asset dispositions, if any, in new properties or other
appropriate investments consistent with its investment objectives. After the
expiration of the applicable holding period with respect to their units, limited
partners in the operating partnership are entitled to exercise the right to have
their units redeemed either for common shares or for cash, at the option of
Vornado.

                                     VORNADO

          Vornado has a perpetual term and intends to continue its operations
for an indefinite time period. Under the declaration of trust, the dissolution
of Vornado must be approved at any meeting of shareholders called for that
purpose by the affirmative vote of the holders of not less than a majority of
"shares," as defined in the declaration of trust, outstanding. Vornado has an
indirect interest in the properties and property service businesses owned by the
operating partnership. Shareholders of Vornado are expected to realize liquidity
of their investments by the trading of the common shares on the NYSE.

                                       60


                                    LIQUIDITY

                            THE OPERATING PARTNERSHIP

          Although class A units are registered as a class under the Securities
Exchange Act of 1934, they are not registered under the Securities Act or any
state securities laws and therefore may not be sold, pledged, hypothecated or
otherwise transferred unless first registered under the Securities Act and any
applicable state securities laws, or unless an exemption from registration is
available. Units also may not be sold or otherwise transferred unless the other
transfer restrictions discussed below have been satisfied. Vornado and the
operating partnership do not intend to register the units under the Securities
Act or any state securities laws.

          Limited partners in the operating partnership may not transfer any of
their rights as limited partners without the consent of Vornado, and Vornado may
withhold its consent in its sole discretion if it determines that the transfer
would cause any or all of the limited partners other than the limited partner
seeking to transfer his or her rights to incur tax liability as a result of the
transfer. Limited partners in the operating partnership may, after the
expiration of the applicable holding period with respect to their units,
transfer beneficial interests in units without the consent of Vornado as general
partner of the operating partnership, if they comply with restrictions designed
to avoid violations of any federal or state securities laws. A transferee of
units has no right to become a substituted limited partner without the consent
of Vornado, which Vornado may withhold in its sole and absolute discretion.
Limited partners have the right to elect to have their units redeemed by the
operating partnership. Upon redemption of units, a limited partner will receive
cash or, at the election of Vornado, common shares of Vornado in exchange for
the redeemed units.

                                     VORNADO

          Any common shares issued in exchange for redeemed units will be
registered under the Securities Act and be freely transferable, as long as the
shareholder complies with the ownership limits in the declaration of trust.
Vornado's common shares are currently listed on the NYSE under the ticker symbol
of "VNO" and have been so listed by Vornado and its predecessor for over 35
years. The future breadth and strength of this secondary market will depend,
among other things, upon the number of common shares outstanding, Vornado's
financial results and prospects, the general interest in Vornado's and other's
real estate investments, and Vornado's dividend yield compared to that of other
debt and equity securities.

                          POTENTIAL DILUTION OF RIGHTS

                            THE OPERATING PARTNERSHIP

          Vornado as general partner of the operating partnership is authorized,
in its sole discretion and without limited partner approval, to cause the
operating partnership to issue additional limited partnership interests and
other equity securities for any partnership purpose at any time to Vornado, the
limited partners or other persons on terms established by Vornado.

          The interests with respect to cash available for distribution of the
limited partners in the operating partnership may be diluted if Vornado, in its
sole discretion, causes the operating partnership to issue additional units or
other equity securities.

                                      VORNADO

          The Board of Trustees of Vornado may, in its discretion, authorize the
issuance of additional common shares and other equity securities of Vornado,
including one or more classes or series of common or preferred shares of
beneficial interest, with the voting rights, dividend rates, preferences,
subordinations, conversion or redemption prices or rights, maturity dates,
distribution, exchange or liquidation rights or other rights that the Board of
Trustees may specify at the time. The issuance of additional common shares or
other similar equity securities may result in the dilution of the

                                       61

                                     VORNADO

interests of the shareholders. As permitted by the Maryland REIT law, the
declaration of trust contains a provision permitting the Board of Trustees,
without any action by the shareholders of Vornado, to amend the declaration of
trust to increase or decrease the aggregate number of shares of beneficial
interest or the number of shares of any class of shares of beneficial interest
that Vornado has authority to issue. Under the declaration of trust, holders of
common shares do not have any preemptive rights to subscribe to any securities
of Vornado.

                               MANAGEMENT CONTROL

                            THE OPERATING PARTNERSHIP

          All management powers over the business and affairs of the operating
partnership are vested in Vornado as the general partner of the operating
partnership, and no limited partner of the operating partnership has any right
to participate in or exercise control or management power over the business and
affairs of the operating partnership, except as described under "Description of
the Units and the Operating Partnership--Borrowing by the Operating Partnership"
and "--Sales of Assets." Vornado may not be removed as general partner by the
limited partners with or without cause.

                                     VORNADO

          The Board of Trustees has exclusive control over the management of
Vornado's business and affairs, limited only by express restrictions on the
Board's control in the declaration of trust and bylaws, the partnership
agreement and applicable law. The Board of Trustees is classified into three
classes of trustees. At each annual meeting of the shareholders of Vornado, the
successors of the class of trustees whose terms expire at that meeting are
elected. The policies adopted by the Board of Trustees may be altered or
eliminated without a vote of the shareholders. Accordingly, except for their
vote in the elections of trustees, shareholders have no control over the
ordinary business policies of Vornado.

          Because a portion of the Board of Trustees is elected each year by the
shareholders at Vornado's annual meeting, the shareholders have greater control
over the management of Vornado than the limited partners have over the operating
partnership.

                     DUTIES OF GENERAL PARTNER AND TRUSTEES

                            THE OPERATING PARTNERSHIP

          Under Delaware law, Vornado, as the general partner of the operating
partnership, is accountable to the operating partnership as a fiduciary and,
consequently, is required to exercise good faith and integrity in all of its
dealings with respect to partnership affairs. However, under the partnership
agreement, Vornado is expressly under no obligation to consider the separate
interests of the limited partners in deciding whether to cause the operating
partnership to take or decline to take any actions, and Vornado is not liable
for monetary damages for losses sustained, liabilities incurred or benefits not
derived by limited partners as a result of Vornado's decisions, provided that
the general partner has acted in good faith.

                                      VORNADO

          Under Maryland law, there is no statute specifying the duties of
trustees of a REIT like Vornado. However, Maryland counsel to Vornado believes
that it is likely that a Maryland court would refer to the Maryland General
Corporation Law, which requires directors of a Maryland corporation to perform
their duties in good faith, in a manner that they reasonably believe to be in
the best interests of the corporation and with the care of an ordinarily prudent
person in a like position under similar circumstances. The Maryland General
Corporation Law presumes that a director's standard of care has been satisfied.

                                       62


                    MANAGEMENT LIABILITY AND INDEMNIFICATION

                            THE OPERATING PARTNERSHIP

          As a matter of Delaware law, the general partner has liability for the
payment of the obligations and debts of the operating partnership unless
limitations upon this liability are stated in the document or instrument
evidencing the obligation. Under the partnership agreement, the operating
partnership has agreed to indemnify Vornado and any trustee or officer of
Vornado from and against all losses, claims, damages, liabilities, joint or
several, expenses including legal fees, fines, settlements and other amounts
incurred in connection with any actions relating to the operations of the
operating partnership as described in the partnership agreement in which Vornado
or any trustee or officer of Vornado is involved, unless the act was in bad
faith or the result of active and deliberate dishonesty and was material to the
action; the party seeking indemnification received an improper personal benefit;
or in the case of any criminal proceeding, the party seeking indemnification had
reasonable cause to believe the act was unlawful.

          The reasonable expenses incurred by an indemnified party may be
advanced by the operating partnership before the final disposition of the
proceeding upon receipt by the operating partnership of an affirmation by the
indemnified person of his, her or its good faith belief that the standard of
conduct necessary for indemnification has been met and an undertaking by the
indemnified person to repay the amount if it is determined that this standard
was not met.

                                     VORNADO

          The Maryland REIT law permits a Maryland real estate investment trust
to include in its declaration of trust a provision limiting the liability of its
trustees, officers, employees and agents to the trust and its shareholders for
money damages except for liability resulting from actual receipt of any improper
benefit or profit in money, property or services; or active and deliberate
dishonesty material to the cause of action established by a final judgment.

          The declaration of trust of Vornado contains a provision of this kind
that eliminates the liability of Vornado's trustees and officers to Vornado and
its shareholders to the maximum extent permitted by the Maryland REIT law.
Vornado's declaration of trust authorizes it, to the extent permitted in the
bylaws, to indemnify, and to pay or reimburse reasonable expenses to, as they
are incurred by, each trustee or officer, including any person who, while a
trustee of Vornado, is or was serving at the request of Vornado as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan, from all claims and liabilities to which the indemnified person
may become subject by reason of being or having been a trustee or officer.

          Vornado's bylaws require it to indemnify to the maximum extent
permitted by the Maryland REIT law any present or former trustee or officer,
including, without limitation, any individual who, while a trustee or officer
and at the request of Vornado, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of that corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, who has been
successful, on the merits or otherwise, in the defense of a proceeding to which
he was made a party by reason of that status, against reasonable expenses
incurred by him in connection with the proceeding; and any present or former
trustee or officer against any claim or liability to which that person may
become subject by reason of that status unless it is established that (a) that
person's act or omission was material to the cause of action giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, (b) he or she actually received an improper personal
benefit in money, property or services or (c) in the case of a criminal
proceeding, he or she had reasonable cause to believe that his or her act or
omission was unlawful.

          In addition, Vornado's bylaws require Vornado to pay or reimburse, in
accordance with the Maryland REIT law, in advance of final disposition of a

                                       63

                                     VORNADO

proceeding, reasonable expenses incurred by a present or former trustee or
officer made a party to a proceeding by reason of that status, provided that
Vornado has received a written affirmation by the trustee or officer of his good
faith belief that he has met the applicable standard of conduct necessary for
indemnification by Vornado as authorized by the bylaws, and a written
undertaking by him or on his behalf to repay the amount paid or reimbursed by
Vornado if it is ultimately determined that the applicable standard of conduct
was not met. Vornado's bylaws also permit Vornado to provide indemnification and
payment or reimbursement of expenses to a present or former trustee or officer
who served a predecessor of Vornado in that capacity and to any employee or
agent of Vornado or a predecessor of Vornado; provide that any indemnification
or payment or reimbursement of the expenses permitted by the bylaws shall be
furnished in accordance with the procedures provided for indemnification or
payment or reimbursement of expenses, as the case may be, under Section 2-418 of
the Maryland General Corporation Law for directors of Maryland corporations; and
permit Vornado to provide any other and further indemnification or payment or
reimbursement of expenses that may be permitted by the Maryland General
Corporation Law for directors of Maryland corporations.

          The Maryland REIT law permits a Maryland real estate investment trust
to indemnify and advance expenses to its trustees, officers, employees and
agents to the same extent as permitted by the Maryland General Corporation Law
for directors and officers of Maryland corporations. The Maryland General
Corporation Law permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that the act or omission of
the director or officer was material to the matter giving rise to the proceeding
and (a) was committed in bad faith or (b) was the result of active and
deliberate dishonesty; the director or officer actually received an improper
personal benefit in money, property or services; or in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful.

          However, under the Maryland General Corporation Law, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the Maryland

                                       64

                                     VORNADO

General Corporation Law permits a corporation to advance reasonable expenses to
a director or officer upon the corporation's receipt of a written affirmation by
the director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by the corporation, and a written
undertaking by him or on his behalf to repay the amount paid or reimbursed by
the corporation if it is ultimately determined that the standard of conduct was
not met.

          Thus, the management of the operating partnership and Vornado have
substantially the same rights to indemnification.

                             LIABILITY OF INVESTORS

                            THE OPERATING PARTNERSHIP

          Under the partnership agreement and applicable state law, the
liability of the limited partners for the operating partnership's debts and
obligations generally is limited to the amount of their investments in the
operating partnership, together with their interest in the operating
partnership's undistributed income, if any.

                                      VORNADO

          Under the Maryland REIT law, shareholders are not personally liable
for the obligations of Vornado. The common shares, upon issuance, will be fully
paid and nonassessable.

          Thus, the limited partners in the operating partnership and the
shareholders of Vornado have substantially the same limited personal liability.

                                  VOTING RIGHTS

                            THE OPERATING PARTNERSHIP

          Under the partnership agreement, the limited partners have limited
voting rights. The limited partners have the right to vote on any proposed
action of the general partner that would contravene any express prohibition or
limitation in the partnership agreement, and any action of this kind requires
unanimous approval by the limited partners. The limited partners do not have the
right to vote on any proposed sale, exchange, transfer or disposal of all or
substantially all of the assets of the operating partnership, except as required
under the lock-up provisions. See "Description of the Units and the Operating
Partnership--Sales of Assets" for information about the lock-up provisions. In
addition, the limited partners do not have the right to propose amendments to
the partnership agreement, and their rights to vote on amendments are restricted
as described under the caption "Description of the Units and the Operating
Partnership--Amendment of the Partnership Agreement." Any amendment that
requires the approval of the limited partners may be approved by a majority of
the limited partners, except that any amendment that would change the limited
liability of a limited partner, change the voting requirements for specified
actions or amendments under the partnership agreement or change specified
provisions in the partnership agreement with respect to distributions and
allocations or the right to redeem units must be approved by each limited
partner adversely affected by the amendment. In addition, some series of
preferred units have special voting rights that require their consent for
actions that would adversely affect their preferences.

                                      VORNADO

          The business and affairs of Vornado are managed under the direction of
the Board of Trustees, which currently consists of nine members in classes
having three-year staggered terms of office. One class is elected by the
shareholders at each annual meeting of Vornado shareholders. Maryland law
requires that certain major corporate transactions, including most amendments to
the declaration of trust, may be consummated only with the approval of
shareholders. The declaration of trust permits any action which may be taken at
a meeting of shareholders to be taken without a meeting if a written consent to
the action is signed by holders of outstanding shares of beneficial interest
having not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
were present and voted. Vornado had 1,471,423 series A convertible preferred
shares, 3,400,000 cumulative redeemable series B preferred shares, and 4,600,000
cumulative redeemable series C preferred shares issued and outstanding as of
November 30, 2002. The holders of preferred shares generally have no right to
vote, except that if and whenever six quarterly dividends, whether or not
consecutive, payable on any series of preferred shares are in arrears, which,
with respect to any quarterly dividend, means that the dividend has not been
paid in full, whether or not the dividend was earned or declared,

                                       65


                                     VORNADO

the holders of that series will have the right, voting as a class, to elect two
additional Trustees; and so long as any preferred shares are outstanding, the
affirmative vote of at least two-thirds of the outstanding preferred shares and
all other series of voting preferred shares, voting as a single class regardless
of series, will be necessary to (a) amend, alter or repeal the declaration of
trust so as to materially and adversely affect the voting powers, rights or
preferences of the holders of the preferred shares or (b) authorize, create or
increase the authorized amount of any shares ranking prior to the preferred
shares in the distribution of assets or any liquidation or in the payment of
dividends. Each common share has one vote.

          The Board of Trustees has the power, however, to create additional
classes of parity and junior shares, increase the authorized number of parity
and junior shares, and issue additional series of parity and junior shares
without the consent of any holder of preferred shares.

       AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE DECLARATION OF TRUST

                            THE OPERATING PARTNERSHIP

          Vornado generally has the power, without the consent of any limited
partners, to amend the partnership agreement as may be required to reflect any
changes that Vornado deems necessary or appropriate in its sole discretion,
provided that the amendment does not adversely affect or eliminate any right
granted to a limited partner that is protected by specified special voting
provisions. See "Description of the Units and the Operating
Partnership--Amendment of the Partnership Agreement and the Operating
Partnership" for further information about Vornado's power to amend the
partnership agreement and the limits on that power.

                                     VORNADO

          Under the Maryland REIT law and the declaration of trust, the
trustees, by a two-thirds vote, may at any time amend the declaration of trust,
without the approval of shareholders, to enable Vornado to qualify as a REIT
under the Internal Revenue Code or as a real estate investment trust under the
Maryland REIT law. As permitted by the Maryland REIT law, the declaration of
trust authorizes Vornado's Board of Trustees, without any action by the
shareholders, to amend the declaration of trust from time to time to increase or
decrease the aggregate number of shares of beneficial interest or the number of
shares of beneficial interest of any class that Vornado is authorized to issue.
Except for certain specified amendments that require the vote of the holders of
two-thirds of the outstanding shares, other amendments to the declaration of
trust require the vote of holders of a majority of the outstanding shares, as
defined in the declaration of trust.

                            REVIEW OF INVESTOR LISTS

                            THE OPERATING PARTNERSHIP

          Under the partnership agreement, a limited partner in the operating
partnership, upon written demand with a statement of the purpose of the demand
and at the limited partner's expense, is entitled to obtain a current list of
the name and last known business, residence or mailing address of each limited
partner of the operating partnership.

                                    VORNADO

          Under the Maryland General Corporation Law, as applicable to REITs,
one or more shareholders holding of record for at least six months at least 5%
of the outstanding shares of beneficial interest of any class of a real estate
investment trust may, upon written request, inspect and copy during usual
business hours the share ledger of the real estate investment trust or, if the
real estate investment trust does not maintain an

                                       66

                                     VORNADO
original or duplicate share ledger at its principal office, obtain a verified
list of shareholders, stating their names and addresses and the number of shares
of each class held by each shareholder.

          Thus, the limited partners in the operating partnership and the
shareholders of Vornado have similar rights to inspect and, at their own
expense, make copies of investor lists, with some limitations.

                           REVIEW OF BOOKS AND RECORDS

                            THE OPERATING PARTNERSHIP

          Under the partnership agreement, a limited partner in the operating
partnership, upon written demand with a statement of the purpose of the demand
and at the limited partner's expense, is entitled to obtain a copy of the
operating partnership's federal, state and local income tax returns, to obtain a
copy of the most recent annual and quarterly reports filed by Vornado with the
SEC and to obtain some other records and information as provided in the
partnership agreement. Limited partners in the operating partnership do not have
any right to inspect the books of the operating partnership.

                                    VORNADO

          Under the Maryland General Corporation Law, as applicable to REITs,
any shareholder or his agent may inspect and copy during normal business hours
the following real estate investment trust documents: bylaws; minutes of the
proceedings of shareholders; annual statements of affairs; and voting trust
agreements on file at the real estate investment trust's principal office.

          In addition, one or more shareholders holding of record at least 5% of
the outstanding shares of beneficial interest of any class of a real estate
investment trust may, upon written request, inspect and copy during usual
business hours the books of account of the real estate investment trust.

                          ISSUANCE OF ADDITIONAL EQUITY

                            THE OPERATING PARTNERSHIP

          The operating partnership is generally authorized to issue units and
other partnership interests, including partnership interests of different series
or classes, as determined by Vornado as the general partner in its sole
discretion. The operating partnership may issue units and other partnership
interests to Vornado, as long as these interests are issued in connection with a
comparable issuance of securities of Vornado and proceeds raised in connection
with the issuance of the Vornado securities are contributed to the operating
partnership. The terms of some series of preferred units limit Vornado's ability
to issue other series of units ranking prior to them.

                                      VORNADO

          The Board of Trustees may authorize the issuance, in its discretion,
of additional common shares and other equity securities of Vornado, including
one or more classes of common or preferred shares, with the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption that the Board
of Trustees may establish.

          The operating partnership and Vornado both have substantial
flexibility to raise equity through the sale of additional units, shares of
beneficial interest or other securities to finance the business and affairs of
the operating partnership.

                               BORROWING POLICIES

                            THE OPERATING PARTNERSHIP

          The operating partnership has no restrictions on borrowings, and
Vornado as general partner has full power and authority to borrow money on
behalf of the operating partnership. However, under the terms of the lock-up
provisions, the operating partnership is limited in its ability to refinance the
indebtedness secured by some of its properties, unless affected limited partners
are compensated for adverse tax consequences in accordance with the lockup
agreements. See "Description of the Units and the Operating
Partnership--Borrowing by the Operating Partnership" for further information
about the lockup agreements.

                                      VORNADO

          Vornado is not restricted under its declaration of

                                       67


                                     VORNADO
trust from borrowing. However, under the partnership agreement, Vornado, as
general partner, may not issue debt securities or otherwise incur any debts
unless it contributes the proceeds from the incurrence of debts to the operating
partnership. Therefore, all indebtedness incurred by Vornado will be for the
benefit of the operating partnership.

                              PERMITTED INVESTMENTS

                            THE OPERATING PARTNERSHIP

          The operating partnership's purpose is to conduct any business that
may be lawfully conducted by a Delaware limited partnership, provided that this
business is to be conducted in a manner that permits Vornado to be qualified as
a REIT unless Vornado ceases to qualify as a REIT for any reason. The operating
partnership is authorized to perform any and all acts for the furtherance of the
purposes and business of the operating partnership, including making
investments, provided that the operating partnership may not take, or refrain
from taking, any action which, in the judgment of Vornado as general partner:
could adversely affect the ability of the general partner to continue to qualify
as a REIT; could subject the general partner to any additional taxes under
Section 857 or Section 4981 of the Internal Revenue Code; or could violate any
law or regulation of any governmental body.

          The operating partnership may take any action or inaction described in
the preceding sentence only with Vornado's specific consent.

                                     VORNADO

          Under its declaration of trust, Vornado may engage in any lawful
activity permitted by the Maryland REIT law. Under the partnership agreement,
Vornado, as general partner, agrees that it will not, directly or indirectly,
enter into or conduct any business other than in connection with the ownership,
acquisition and disposition of partnership interests in the operating
partnership except with the consent of a majority of the holders of common units
other than Vornado.

          Vornado is also permitted to acquire, directly or indirectly, up to 1%
interest in any partnership or limited liability company at least 99% of whose
equity is owned by the operating partnership.

          Vornado and the operating partnership may invest in any types of real
estate and geographic areas that Vornado deems appropriate. Subject to
restrictions relating to the protection of Vornado's REIT status, the operating
partnership may perform all acts necessary for the furtherance of the operating
partnership's business, including diversifying its portfolio to protect the
value of its assets or as a prudent hedge against the risk of having too many of
its investments limited to a single asset group or in a particular region of the
country. Vornado, as general partner of the operating partnership, generally may
not conduct any business other than through the operating partnership without
the consent of the holders of a majority of the common limited partnership
interests, not including the limited partnership interests held by Vornado in
its capacity as a limited partner in the operating partnership.

                          OTHER INVESTMENT RESTRICTIONS

                            THE OPERATING PARTNERSHIP

          Other than restrictions precluding investments by the operating
partnership that would adversely affect the qualification of Vornado as a REIT
and restrictions on transactions with affiliates, the partnership agreement does
not generally restrict the operating partnership's authority to make
investments, lend operating partnership funds or reinvest the operating
partnership's cash flow and net sale or refinancing proceeds.

                                      VORNADO

          Vornado's declaration of trust authorizes Vornado to enter into any
contract or transaction of any kind, including the purchase or sale of property,
with any person, including any trustee, officer, employee or agent of Vornado,
whether or not any of them has a

                                       68


financial interest in the transaction.

                                       69


                              PLAN OF DISTRIBUTION

          This prospectus relates to the possible issuance by Vornado of up to
9,518,576 shares, if, and to the extent that, Vornado elects to issue common
shares to holders of up to 9,518,576 units, upon the tender of the units for
redemption.

          Vornado will not receive any cash proceeds from the issuance of the
common shares to holders of units upon receiving a notice of redemption. Vornado
will acquire one unit from a redeeming partner, in exchange for each common
share that Vornado issues. Consequently, with each redemption, Vornado's
interest in the operating partnership will increase.

          Application will be made to list the common shares on the New York
Stock Exchange.

          All costs, expenses and fees in connection with the registration of
the common shares will be borne by Vornado.

                                     EXPERTS

          The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this prospectus by reference from
Vornado's annual report on Form 10-K for the year ended December 31, 2001 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of Deloitte & Touche LLP given upon their authority
as experts in accounting and auditing.

          On March 18, 2002, we filed with the SEC a Form 8-K/A, which provides
additional information regarding the Charles E. Smith Commercial Realty L.P.
acquisition and which is incorporated in this prospectus by reference. The
consolidated balance sheet as of December 31, 2001 and the consolidated
statements of income, changes in partners' deficit and cash flows for the year
ended December 31, 2001 of Charles E. Smith Commercial Realty L.P. and
subsidiaries included in the Form 8-K/A were audited by Arthur Andersen LLP,
independent public accountants, and were included in the Form 8-K/A in reliance
upon the authority of that firm as experts in accounting and auditing. We have
not been able to obtain, after reasonable efforts, the written consent of Arthur
Andersen LLP to our naming that firm in this prospectus as an expert or
including its audit report as required by Section 7 of the Securities Act of
1933, as amended, and we have not included Arthur Andersen LLP's consent in
reliance on Rule 437a under the Securities Act. As a result, you will not be
able to recover against Arthur Andersen LLP under Section 11(a)(4) of the
Securities Act, if applicable, for any untrue statement of a material fact
contained in the Charles E. Smith Commercial Realty L.P. financial statements
audited by Arthur Andersen LLP or any omission to state a material fact required
to be stated in those financial statements or necessary to make the statements
in them not misleading. Moreover, the events arising out of Arthur Andersen
LLP's conviction in June 2002 on a federal charge of obstruction of justice
relating to the audits of Enron Corp. may adversely affect the ability of Arthur
Andersen LLP to satisfy any successful claim. See "Risk Factors -- We Have Not
Obtained the Consent of Arthur Andersen LLP for the Use of Its Previously Issued
Audit Report Regarding the Financial Statements of Charles E. Smith Commercial
Realty L.P., and That May Limit Your Ability to Recover From Arthur Andersen LLP
With Respect to That Audit. Our Ability to Recover From That Firm for That Audit
May Also Be Limited" above for more information about this risk.

                          VALIDITY OF THE COMMON SHARES

          The validity of the common shares issued under this prospectus will be
passed upon for Vornado by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore,
Maryland, Maryland counsel to Vornado.

                                       70


                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

          The estimated expenses in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as follows:


                                                       
SEC registration fee................................      $ 32,051
Printing and engraving expenses.....................      $ 50,000
Legal fees and disbursements........................      $ 50,000
Accounting fees and disbursements...................      $ 50,000
Transfer agent's and depositary's fees and
  disbursements.....................................      $ 25,000
Blue Sky fees and expenses..........................      $ 15,000
Miscellaneous (including listing fees)..............      $ 25,000
                                                          --------
Total...............................................      $247,051
                                                          --------


ITEM 15.  INDEMNIFICATION OF TRUSTEES AND OFFICERS.

          The Maryland REIT Law ("MRL") permits a Maryland real estate
investment trust to include in its declaration of trust a provision limiting the
liability of its trustees and officers to the trust and its shareholders for
money damages except for liability resulting from (i) actual receipt of an
improper benefit or profit in money, property or services or (ii) active and
deliberate dishonesty established by a final judgment as being material to the
cause of action. Vornado's Declaration of Trust includes such a provision
eliminating such liability to the maximum extent permitted by the MRL.

          Vornado's Declaration of Trust authorizes it to indemnify, and to pay
or reimburse reasonable expenses to, as such expenses are incurred by, each
trustee or officer (including any person who, while a trustee of Vornado, is or
was serving at the request of Vornado as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan) from all claims and
liabilities to which such person may become subject by reason of his being or
having been a trustee, officer, employee or agent.

          Vornado's Bylaws require it to indemnify (a) any trustee or officer or
any former trustee or officer (including and without limitation, any individual
who, while a trustee or officer and at the request of Vornado, serves or has
served another corporation, partnership, joint venture, trust, employee benefit
plan or any other enterprise as a director, officer, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) who has been successful, on the merits or otherwise, in the defense
of a proceeding to which he was made a party by reason of such status, against
reasonable expenses incurred by him in connection with the proceeding and (b)
any present or former trustee or officer against any claim or liability to which
he may become subject by reason of such status unless it is established that (i)
his act or omission was material to the matter giving rise to the proceeding and
was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) he actually received an improper personal benefit in money,
property or services or (iii) in the case of a criminal proceeding, he had
reasonable cause to believe that his act or omission was unlawful. In addition,
Vornado's Bylaws require it to pay or reimburse, in advance of final disposition
of a proceeding, reasonable expenses incurred by a present or former trustee or
officer made a party to a proceeding by reason of such status upon Vornado's
receipt of (i) a written affirmation by the trustee or officer of his good faith
belief that he has met the applicable standard of conduct necessary for
indemnification by Vornado and (ii) a written undertaking by him or on his
behalf to repay the amount paid or reimbursed by Vornado if

                                      II-1


it shall ultimately be determined that the applicable standard of conduct was
not met. Vornado's Bylaws also (i) permit Vornado to provide indemnification and
payment or reimbursement of expenses to a present or former trustee or officer
who served a predecessor of Vornado in such capacity and to any employee or
agent of Vornado or a predecessor of Vornado, (ii) provide that any
indemnification or payment or reimbursement of the expenses permitted by the
Bylaws shall be furnished in accordance with the procedures provided for
indemnification or payment or reimbursement of expenses, as the case may be,
under Section 2-418 of the Maryland General Corporation Law (the "MGCL") for
directors of Maryland corporations and (iii) permit Vornado to provide such
other and further indemnification or payment or reimbursement of expenses as may
be permitted by the MGCL, as in effect from time to time, for directors of
Maryland corporations.

          The MRL permits a Maryland real estate investment trust to indemnify
and advance expenses to its trustees, officers, employees and agents to the same
extent as permitted by the MGCL for directors and officers of Maryland
corporations. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, under the MGCL, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.

          The Second Amended and Restated Agreement of Limited Partnership,
dated as of October 20, 1997, as amended (the "Partnership Agreement"), of the
operating partnership provides, generally, for the indemnification of an
"Indemnitee" against losses, claims, damages, liabilities, expenses (including,
without limitation, attorneys' fees and other legal fees and expenses),
judgments, fines, settlements and other amounts that relate to the operations of
the operating partnership unless it is established that (i) the act or omission
of the Indemnitee was material and either was committed in bad faith or pursuant
to active and deliberate dishonesty, (ii) the Indemnitee actually received an
improper personal benefit in money, property or services or (iii) in the case of
any criminal proceeding, the Indemnitee had reasonable cause to believe that the
act or omission was unlawful. For this purpose, the term "Indemnitee" includes
(i) any person made a party to a proceeding by reason of its status as (A) the
general partner of the operating partnership, (B) a limited partner of the
operating partnership or (C) an officer of the operating partnership or a
trustee, officer or shareholder of Vornado and (ii) such other persons
(including affiliates of Vornado or the operating partnership) as Vornado may
designate from time to time in its discretion. Any such indemnification will be
made only out of assets of the operating partnership, and in no event may an
Indemnitee subject the limited partners of the operating partnership to personal
liability by reason of the indemnification provisions in the Partnership
Agreement.

          Pursuant to the registration rights agreement between Vornado and the
holders of units redeemable for the shares registered hereunder, each unit
holder named therein (and each permitted assignee of such holder, on a several
basis) agrees to indemnify and hold harmless Vornado, and each of its
trustees/directors and officers (including each trustee/director and officer of
Vornado who signed a registration statement), and each person, if any, who
controls Vornado within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (i) against any and all loss, liability, claim,
damage

                                      II-2


and expense whatsoever, as incurred, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement (or any amendment thereto) pursuant to which the common
shares issuable to the unit holders upon redemption of their units were
registered under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading or arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; (ii)
against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of such unit holder; and (iii)
against any and all expenses whatsoever, as incurred (including reasonable fees
and disbursements of counsel), reasonably incurred in investigating, preparing
or defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, in each case whether or
not a party, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided, however,
that such indemnity shall only apply with respect to any loss, liability, claim,
damage or expense to the extent arising out of (A) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to Vornado by such unit holder
expressly for use in the registration statement (or any amendment thereto) or
the prospectus (or any amendment or supplement thereto) or (B) such unit
holder's failure to deliver an amended or supplemental prospectus if such loss,
liability, claim, damage or expense would not have arisen had such delivery
occurred. A unit holder and any permitted assignee shall not be required to
indemnify Vornado, its officers, trustees or control persons with respect to any
amount in excess of the amount of the total proceeds to such unit holder or
permitted assignee, as the case may be, from sales under the registration
statement of such unit holder's shares issuable upon redemption of units, and no
unit holder shall be liable under the indemnification provision for any
statements or omissions of any other unit holder.

          Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers, trustees or controlling
persons of the registrant pursuant to the foregoing provisions or otherwise,
Vornado has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and, therefore,
unenforceable. In addition, indemnification may be limited by state securities
laws. Vornado has purchased liability insurance for the purpose of providing a
source of funds to pay the indemnification described above.

ITEM 16.  EXHIBITS.

EXHIBIT NO.                                EXHIBIT

3.1          -- Amended and Restated Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessment and
                Taxation of Maryland on April 16, 1993 - Incorporated by
                reference to Exhibit 3(a) of Vornado Realty Trust's Registration
                Statement on Form S-4 (File No. 33-60286), filed on April 15,
                1993.
3.2          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on May 23, 1996 - Incorporated by reference
                to Exhibit 3.2 to Vornado Realty Trust's Annual Report on Form
                10-K for the year ended December 31, 2001 (File No. 001-11954).
3.3          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 3, 1997 - Incorporated by
                reference to Exhibit 3.3 to Vornado

                                      II-3


EXHIBIT NO.                                EXHIBIT

                Realty Trust's Annual Report on Form 10-K for the year ended
                December 31, 2001 (File No. 001-11954).
3.4          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on October 14, 1997 - Incorporated by
                reference to Exhibit 3.2 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.5          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 22, 1998 - incorporated by
                reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K
                dated as of April 22, 1998 (File No. 1-11954), filed on April
                28, 1998.
3.6          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on November 24, 1999 - Incorporated by
                reference to Exhibit 3.4 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.7          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 20, 2000 - Incorporated by
                reference to Exhibit 3.5 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.8          -- Articles of Amendment of Declaration of Trust of Vornado
                Realty Trust, as filed with the State Department of Assessments
                and Taxation of Maryland on September 14, 2000 - Incorporated by
                reference to Exhibit 4.6 to Vornado's Registration Statement on
                Form S-8 (File No. 333-68462), filed on August 27, 2001.
3.9          -- Articles of Amendment of Declaration of Trust of Vornado dated
                May 31, 2002, as filed with the Department of Assessments and
                Taxation of the State of Maryland on June 13, 2002 -
                Incorporated by reference to Exhibit 3.9 to Vornado Realty
                Trust's Quarterly Report on Form 10-Q for the quarter ended June
                30, 2002 (File No. 001-11954).
3.10         -- Articles of Amendment of Declaration of Trust of Vornado dated
                June 6, 2002, as filed with the Department of Assessments and
                Taxation of the State of Maryland on June 13, 2002 -
                Incorporated by reference to Exhibit 3.10 to Vornado Realty
                Trust's Quarterly Report on Form 10-Q for the quarter ended June
                30, 2002 (File No. 001-11954).
3.11         -- Articles Supplementary Classifying Vornado's $3.25 Series A
                Preferred Shares of Beneficial Interest, liquidation preference
                $50.00 per share - Incorporated by reference to Exhibit 4.1 to
                Vornado's Current Report on Form 8-K, dated April 3, 1997 (File
                No. 001-11954), filed on April 8, 1997
3.12         -- Articles Supplementary Classifying Vornado Realty Trust's $3.25
                Series A Convertible Preferred Shares of Beneficial Interest, as
                filed with the State Department of Assessments and Taxation of
                Maryland on December 15, 1997- Incorporated by reference to
                Exhibit 3.10 to Vornado Realty Trust's Annual Report on Form
                10-K for the year ended December 31, 2001 (File No. 001-11954).
3.13         -- Articles Supplementary Classifying Vornado Realty Trust's Series
                D-1 8.5% Cumulative Redeemable Preferred Shares of Beneficial
                Interest, no par value - Incorporated by reference to Exhibit
                3.1 to Vornado Realty Trust's Current Report on Form 8-K, dated
                November 12, 1998 (File No. 001-11954), filed on November 30,
                1998

                                      II-4


EXHIBIT NO.                                EXHIBIT

3.14         -- Articles Supplementary Classifying Additional Series D-1 8.5%
                Preferred Shares of Beneficial Interest, liquidation preference
                $25.00 per share, no par value - Incorporated by reference to
                Exhibit 3.2 to Vornado Realty Trust's Current Report on Form
                8-K/A, dated November 12, 1998 (File No. 001-11954), filed on
                February 9, 1999.
3.15         -- Articles Supplementary Classifying 8.5% Series B Cumulative
                Redeemable Preferred Shares of Beneficial Interest, liquidation
                preference $25.00 per share, no par value - Incorporated by
                reference to Exhibit 3.3 to Vornado Realty Trust's Current
                Report on Form 8-K, dated March 3, 1999 (File No. 001-11954),
                filed on March 17, 1999.
3.16         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series C 8.5% Cumulative Redeemable Preferred Shares of
                Beneficial Interest, liquidation preference $25.00 per share, no
                par value - Incorporated by reference to Exhibit 3.7 to Vornado
                Realty Trust's Registration Statement on Form 8-A (File No.
                001-11954), filed on May 19, 1999.
3.17         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-2 8.375% Cumulative Redeemable Preferred Shares, dated
                as of May 27, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on May 27, 1999 -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated May 27, 1999 (File No.
                001-11954), filed on July 7, 1999.
3.18         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-3 8.25% Cumulative Redeemable Preferred Shares, dated
                September 3, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on September 3, 1999 -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated September 3, 1999
                (File No. 001-11954), filed on October 25, 1999.
3.19         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-4 8.25% Cumulative Redeemable Preferred Shares, dated
                September 3, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on September 3, 1999 -
                Incorporated by reference to Exhibit 3.2 to Vornado Realty
                Trust's Current Report on Form 8-K, dated September 3, 1999
                (File No. 001-11954), filed on October 25, 1999.
3.20         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-5 8.25% Cumulative Redeemable Preferred Shares -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated November 24, 1999
                (File No. 001-11954), filed on December 23, 1999.
3.21         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-6 8.25% Cumulative Redeemable Preferred Shares, dated
                May 1, 2000, as filed with the State Department of Assessments
                and Taxation of Maryland on May 1, 2000 - Incorporated by
                reference to Exhibit 3.1 to Vornado Realty Trust's Current
                Report on Form 8-K, dated May 1, 2000 (File No. 001-11954),
                filed May 19, 2000.
3.22         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-7 8.25% Cumulative Redeemable Preferred Shares, dated
                May 25, 2000, as filed with the State Department of Assessments
                and Taxation of Maryland on June 1, 2000 - Incorporated by
                reference to Exhibit 3.1 to Vornado Realty Trust's Current
                Report on Form 8-K, dated May 25, 2000 (File No. 001-11954),
                filed on June 16, 2000.
3.23         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-8 8.25% Cumulative Redeemable Preferred Shares -
                Incorporated by refer-

                                      II-5


EXHIBIT NO.                                EXHIBIT

                ence to Exhibit 3.1 to Vornado Realty Trust's Current Report on
                Form 8-K, dated December 8, 2000 (File No. 001-11954), filed on
                December 28, 2000.
3.24         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-9 8.75% Preferred Shares, dated September 21, 2001, as
                filed with the State Department of Assessments and Taxation of
                Maryland on September 25, 2001 - Incorporated by reference to
                Exhibit 3.1 to Vornado Realty Trust's Current Report on Form 8-K
                (File No. 001-11954), filed on October 12, 2001.
3.25         -- Amended and Restated Bylaws of Vornado Realty Trust, as amended
                on March 2, 2000 - Incorporated by reference to Exhibit 3.12 to
                Vornado Realty Trust's Annual Report on Form 10-K for the year
                ended December 31, 1999 (File No. 001-11954), filed on March 9,
                2000.
4.1          -- Instruments defining the rights of security holders (see
                Exhibits 3.1 through 3.25 of this registration statement).
4.2          -- Specimen certificate evidencing Vornado Realty Trust's Common
                Shares of beneficial interest, par value $.04 per share -
                incorporated by reference to Exhibit 4.1 of Amendment No. 1 to
                Vornado Realty Trust's Registration Statement on Form S-3 (File
                No. 33-62395), filed on October 26, 1995.
5            -- Opinion of Ballard Spahr Andrews & Ingersoll, LLP
8.1          -- Tax opinion of Sullivan & Cromwell
8.2          -- Tax opinion of Shearman & Sterling
10           -- Registration Rights Agreement, dated as of July 23, 1998, by
                and between Vornado and the unit holders named therein
                (incorporated by reference to Exhibit 10.1 to Vornado's Current
                Report on Form 8-K/A dated as of January 1, 2002 (File No.
                001-11954), filed on March 18, 2002).
15           -- Letter regarding unaudited interim financial information.
23.1         -- Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
                its opinion filed as Exhibit 5)
23.2         -- Consent of Sullivan & Cromwell (included in its opinion filed as
                Exhibit 8.1)
23.3         -- Consent of Shearman & Sterling (included in its opinion filed as
                Exhibit 8.2)
23.4         -- Consent of Deloitte & Touche LLP
24           -- Power of Attorney (included on signature page)

ITEM 17.  UNDERTAKINGS.

          (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;

                    (i)   To include any prospectus required by Section 10(a)(3)
          of the Securities Act of 1933;

                    (ii)  To reflect in the prospectus any facts or events
          arising after the effective date of the registration statement (or the
          most recent post-effective amendment thereof) which, individually or
          in the aggregate, represent a fundamental change in the information
          set forth in the registration statement. Notwithstanding the
          foregoing, any increase or decrease in volume of securities offered
          (if the total dollar value of securities offered would not exceed that
          which was registered) and any deviation from the low or high end of
          the estimated maximum offering range may be reflected in the form of
          prospectus filed with the Commission pursuant to Rule 424(b) if, in
          the aggregate, the

                                      II-6


          changes in volume and price represent no more than a 20 percent change
          in the maximum aggregate offering price set forth in the "Calculation
          of Registration Fee" table in the effective registration statement.

                    (iii) To include any material information with respect to
          the plan of distribution not previously disclosed in the registration
          statement or any material change to such information in the
          registration statement;

          provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not
          apply if the information required to be included in a post-effective
          amendment by those paragraphs is contained in periodic reports filed
          with or furnished to the Commission by the registrant pursuant to
          Section 13 or Section 15(d) of the Securities Exchange Act of 1934
          that are incorporated by reference in the registration statement.

          (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

          (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.

          (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                      II-7


                                   SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on December 26, 2002.

                                         VORNADO REALTY TRUST,
                                         A Maryland real estate investment trust

                                         By:  /s/ Steven Roth
                                              ---------------
                                              Steven Roth
                                              Chairman of the Board of Trustees
                                              (Principal Executive Officer)

                                      II-8


                                POWER OF ATTORNEY

          Each person whose signature appears below constitutes and appoints
Steven Roth, Michael D. Fascitelli and Joseph Macnow, and each of them, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments,
to this registration statement, to any related Rule 462(b) registration
statement and to any other documents filed with the Securities and Exchange
Commission and to file the same, with all exhibits to the registration statement
and other documents in connection with the registration statement, with the
Securities and Exchange Commission or any other regulatory authority, grants to
the attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and ratifies and confirms all that the attorney-in-fact and agent, or
his substitute, may lawfully do or cause to be done by virtue of this power of
attorney.

          Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

By  /s/ Steven Roth              Chairman of the Board of      December 26, 2002
    --------------------------     Trustees (Principal
    (Steven Roth)                  Executive Officer)

By: /s/ Michael D. Fascitelli    President and Trustee         December 26, 2002
    --------------------------
    (Michael D. Fascitelli)

By: /s/ Joseph Macnow            Executive Vice President -    December 26, 2002
    --------------------------     Finance and Administration
    (Joseph Macnow)                and Chief Financial Officer
                                   (Principal Financial and
                                   Accounting Officer)

By: /s/ Robert P. Kogod          Trustee                       December 26, 2002
    --------------------------
    (Robert P. Kogod)

By: /s/ David Mandelbaum         Trustee                       December 26, 2002
    --------------------------
    (David Mandelbaum)

By: /s/ Stanley Simon            Trustee                       December 26, 2002
    --------------------------
    (Stanley Simon)

By: /s/ Robert H. Smith          Trustee                       December 26, 2002
    --------------------------
    (Robert H. Smith)

By: /s/ Ronald G. Targan         Trustee                       December 26, 2002
    --------------------------
    (Ronald G. Targan)

By: /s/ Richard West             Trustee                       December 26, 2002
    --------------------------
    (Richard West)

By: /s/ Russell B. Wight, Jr.    Trustee                       December 26, 2002
    --------------------------
    (Russell B. Wight, Jr.)

                                      II-9


                                  EXHIBIT INDEX

EXHIBIT NO.                                EXHIBIT

3.1          -- Amended and Restated Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessment and
                Taxation of Maryland on April 16, 1993 - incorporated by
                reference to Exhibit 3(a) of Vornado Realty Trust's Registration
                Statement on Form S-4 (File No. 33-60286), filed on April 15,
                1993.
3.2          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on May 23, 1996 - Incorporated by reference
                to Exhibit 3.2 to Vornado Realty Trust's Annual Report on Form
                10-K for the year ended December 31, 2001 (File No. 001-11954).
3.3          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 3, 1997 - Incorporated by
                reference to Exhibit 3.3 to Vornado Realty Trust's Annual Report
                on Form 10-K for the year ended December 31, 2001 (File No.
                001-11954).
3.4          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on October 14, 1997 - Incorporated by
                reference to Exhibit 3.2 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.5          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 22, 1998 - incorporated by
                reference to Exhibit 3.1 of Vornado's Current Report on Form 8-K
                dated as of April 22, 1998 (File No. 1-11954), filed on April
                28, 1998.
3.6          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on November 24, 1999 - Incorporated by
                reference to Exhibit 3.4 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.7          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on April 20, 2000 - Incorporated by
                reference to Exhibit 3.5 to Vornado Realty Trust's Registration
                Statement on Form S-3 (File No. 333-36080), filed on May 2,
                2000.
3.8          -- Articles of Amendment of Declaration of Trust of Vornado Realty
                Trust, as filed with the State Department of Assessments and
                Taxation of Maryland on September 14, 2000 - Incorporated by
                reference to Exhibit 4.6 to Vornado's Registration Statement on
                Form S-8 (File No. 333-68462), filed on August 27, 2001.
3.9          -- Articles of Amendment of Declaration of Trust of Vornado dated
                May 31, 2002, as filed with the Department of Assessments and
                Taxation of the State of Maryland on June 13, 2002 -
                Incorporated by reference to Exhibit 3.9 to Vornado Realty
                Trust's Quarterly Report on Form 10-Q for the quarter ended
                June 30, 2002 (File No. 001-11954).
3.10         -- Articles of Amendment of Declaration of Trust of Vornado dated
                June 6, 2002, as filed with the Department of Assessments and
                Taxation of the State of Maryland on June 13, 2002 -
                Incorporated by reference to Exhibit 3.10 to Vornado Realty
                Trust's Quarterly Report on Form 10-Q for the quarter ended
                June 30, 2002 (File No. 001-11954).



EXHIBIT NO.                                EXHIBIT

3.11         -- Articles Supplementary Classifying Vornado's $3.25 Series A
                Preferred Shares of Beneficial Interest, liquidation preference
                $50.00 per share - Incorporated by reference to Exhibit 4.1 to
                Vornado's Current Report on Form 8-K, dated April 3, 1997 (File
                No. 001-11954), filed on April 8, 1997
3.12         -- Articles Supplementary Classifying Vornado Realty Trust's $3.25
                Series A Convertible Preferred Shares of Beneficial Interest, as
                filed with the State Department of Assessments and Taxation of
                Maryland on December 15, 1997- Incorporated by reference to
                Exhibit 3.10 to Vornado Realty Trust's Annual Report on Form
                10-K for the year ended December 31, 2001 (File No. 001-11954).
3.13         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-1 8.5% Cumulative Redeemable Preferred Shares of
                Beneficial Interest, no par value - Incorporated by reference to
                Exhibit 3.1 to Vornado Realty Trust's Current Report on Form
                8-K, dated November 12, 1998 (File No. 001-11954), filed on
                November 30, 1998
3.14         -- Articles Supplementary Classifying Additional Series D-1 8.5%
                Preferred Shares of Beneficial Interest, liquidation preference
                $25.00 per share, no par value - Incorporated by reference to
                Exhibit 3.2 to Vornado Realty Trust's Current Report on Form
                8-K/A, dated November 12, 1998 (File No. 001-11954), filed on
                February 9, 1999.
3.15         -- Articles Supplementary Classifying 8.5% Series B Cumulative
                Redeemable Preferred Shares of Beneficial Interest, liquidation
                preference $25.00 per share, no par value - Incorporated by
                reference to Exhibit 3.3 to Vornado Realty Trust's Current
                Report on Form 8-K, dated March 3, 1999 (File No. 001-11954),
                filed on March 17, 1999.
3.16         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series C 8.5% Cumulative Redeemable Preferred Shares of
                Beneficial Interest, liquidation preference $25.00 per share, no
                par value - Incorporated by reference to Exhibit 3.7 to Vornado
                Realty Trust's Registration Statement on Form 8-A (File No.
                001-11954), filed on May 19, 1999.
3.17         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-2 8.375% Cumulative Redeemable Preferred Shares, dated
                as of May 27, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on May 27, 1999 -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated May 27, 1999 (File No.
                001-11954), filed on July 7, 1999.
3.18         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-3 8.25% Cumulative Redeemable Preferred Shares, dated
                September 3, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on September 3, 1999 -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated September 3, 1999
                (File No. 001-11954), filed on October 25, 1999.
3.19         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-4 8.25% Cumulative Redeemable Preferred Shares, dated
                September 3, 1999, as filed with the State Department of
                Assessments and Taxation of Maryland on September 3, 1999 -
                Incorporated by reference to Exhibit 3.2 to Vornado Realty
                Trust's Current Report on Form 8-K, dated September 3, 1999
                (File No. 001-11954), filed on October 25, 1999.
3.20         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-5 8.25% Cumulative Redeemable Preferred Shares -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated November 24, 1999
                (File No. 001-11954), filed on



EXHIBIT NO.                                EXHIBIT

                December 23, 1999.
3.21         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-6 8.25% Cumulative Redeemable Preferred Shares, dated
                May 1, 2000, as filed with the State Department of Assessments
                and Taxation of Maryland on May 1, 2000 - Incorporated by
                reference to Exhibit 3.1 to Vornado Realty Trust's Current
                Report on Form 8-K, dated May 1, 2000 (File No. 001-11954),
                filed May 19, 2000.
3.22         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-7 8.25% Cumulative Redeemable Preferred Shares, dated
                May 25, 2000, as filed with the State Department of Assessments
                and Taxation of Maryland on June 1, 2000 - Incorporated by
                reference to Exhibit 3.1 to Vornado Realty Trust's Current
                Report on Form 8-K, dated May 25, 2000 (File No. 001-11954),
                filed on June 16, 2000.
3.23         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-8 8.25% Cumulative Redeemable Preferred Shares -
                Incorporated by reference to Exhibit 3.1 to Vornado Realty
                Trust's Current Report on Form 8-K, dated December 8, 2000 (File
                No. 001-11954), filed on December 28, 2000
3.24         -- Articles Supplementary Classifying Vornado Realty Trust's
                Series D-9 8.75% Preferred Shares, dated September 21, 2001, as
                filed with the State Department of Assessments and Taxation of
                Maryland on September 25, 2001 - Incorporated by reference to
                Exhibit 3.1 to Vornado Realty Trust's Current Report on Form 8-K
                (File No. 001-11954), filed on October 12, 2001.
3.25         -- Amended and Restated Bylaws of Vornado Realty Trust, as
                amended on March 2, 2000 - Incorporated by reference to
                Exhibit 3.12 to Vornado Realty Trust's Annual Report on Form
                10-K for the year ended December 31, 1999 (File No. 001-11954),
                filed on March 9, 2000.
4.1          -- Instruments defining the rights of security holders (see
                Exhibits 3.1 through 3.25 of this registration statement).
4.2          -- Specimen certificate evidencing Vornado Realty Trust's Common
                Shares of beneficial interest, par value $.04 per share -
                incorporated by reference to Exhibit 4.1 of Amendment No. 1 to
                Vornado Realty Trust's Registration Statement on Form S-3 (File
                No. 33-62395), filed on October 26, 1995.
5            -- Opinion of Ballard Spahr Andrews & Ingersoll, LLP
8.1          -- Tax opinion of Sullivan & Cromwell
8.2          -- Tax opinion of Shearman & Sterling
10           -- Registration Rights Agreement, dated as of July 23, 1998, by
                and between Vornado and the unit holders named therein
                (incorporated by reference to Exhibit 10.1 to Vornado's Current
                Report on Form 8-K/A dated as of January 1, 2002 (File No.
                001-11954), filed on March 18, 2002).
15           -- Letter regarding unaudited interim financial information.
23.1         -- Consent of Ballard Spahr Andrews & Ingersoll, LLP (included
                in its opinion filed as Exhibit 5)
23.2         -- Consent of Sullivan & Cromwell (included in its opinion filed
                as Exhibit 8.1)
23.3         -- Consent of Shearman & Sterling (included in its opinion filed
                as Exhibit 8.2)
23.4         -- Consent of Deloitte & Touche LLP
24           -- Power of Attorney (included on signature page)