x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

June 30, 2010

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

to

Commission File Number:

001-11954

Maryland

22-1657560

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York

10019

(Address of principal executive offices)

(Zip Code)

x Large Accelerated Filer

o Accelerated Filer

o Non-Accelerated Filer (Do not check if smaller reporting company)

o Smaller Reporting Company

Part I.

Financial Information:

Page Number

Item 1.

Financial Statements:

Consolidated Balance Sheets (Unaudited) as of

June 30, 2010 and December 31, 2009

3

Consolidated Statements of Income (Unaudited) for the

Three and Six Months Ended June 30, 2010 and 2009

4

Consolidated Statements of Changes in Equity (Unaudited)

for the Six Months Ended June 30, 2010 and 2009

5

Consolidated Statements of Cash Flows (Unaudited)

for the Six Months Ended June 30, 2010 and 2009

6

Notes to Consolidated Financial Statements (Unaudited)

8

Report of Independent Registered Public Accounting Firm

33

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

67

Item 4.

Controls and Procedures

68

Part II.

Other Information:

Item 1.

Legal Proceedings

69

Item 1A.

Risk Factors

70

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 5.

Other Information

70

Item 6.

Exhibits

70

Signatures

71

Exhibit Index

72

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Amounts in thousands, except share and per share amounts)

June 30,

December 31,

ASSETS

2010 

2009 

Real estate, at cost:

Land

$

 4,617,946 

$

 4,606,065 

Buildings and improvements

 13,055,659 

 12,902,086 

Development costs and construction in progress

 214,804 

 313,310 

Leasehold improvements and equipment

 130,929 

 128,056 

Total

 18,019,338 

 17,949,517 

Less accumulated depreciation and amortization

 (2,683,233)

 (2,494,441)

Real estate, net

 15,336,105 

 15,455,076 

Cash and cash equivalents

 652,121 

 535,479 

Short-term investments

 - 

 40,000 

Restricted cash

 139,562 

 293,950 

Marketable securities

 305,292 

 380,652 

Accounts receivable, net of allowance for doubtful accounts of $52,810 and $46,708

 157,725 

 157,325 

Investments in partially owned entities, including Alexander's of $198,318 and $193,174

 833,884 

 799,832 

Investments in Toys "R" Us

 495,800 

 409,453 

Mezzanine loans receivable, net of allowance of $192,638 and $190,738

 136,857 

 203,286 

Receivable arising from the straight-lining of rents, net of allowance of $5,150 and $4,680

 718,809 

 681,526 

Deferred leasing and financing costs, net of accumulated amortization of $204,656 and $183,224

 330,789 

 311,825 

Due from officers

 13,182 

 13,150 

Other assets

 770,751 

 903,918 

$

 19,890,877 

$

 20,185,472 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

 8,400,599 

$

 8,445,766 

Senior unsecured notes

 1,224,866 

 711,716 

Exchangeable senior debentures

 487,685 

 484,457 

Convertible senior debentures

 404,850 

 445,458 

Revolving credit facility debt

 152,218 

 852,218 

Accounts payable and accrued expenses

 458,628 

 475,242 

Deferred credit

 652,449 

 682,384 

Deferred compensation plan

 83,787 

 80,443 

Deferred tax liabilities

 17,704 

 17,842 

Other liabilities

 98,265 

 88,912 

Total liabilities

 11,981,051 

 12,284,438 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 13,857,608 and 13,892,313 units outstanding

 1,010,913 

 971,628 

Series D cumulative redeemable preferred units - 10,400,000 and 11,200,000 units outstanding

 260,000 

 280,000 

Total redeemable noncontrolling interests

 1,270,913 

 1,251,628 

Vornado shareholders' equity:

Preferred shares of beneficial interest: no par value per share; authorized 110,000,000

shares; issued and outstanding 33,949,284 and 33,952,324 shares

 823,534 

 823,686 

Common shares of beneficial interest: $.04 par value per share; authorized,

250,000,000 shares; issued and outstanding 182,290,243 and 181,214,161 shares

 7,262 

 7,218 

Additional capital

 6,944,410 

 6,961,007 

Earnings less than distributions

 (1,581,176)

 (1,577,591)

Accumulated other comprehensive income

 37,597 

 28,449 

Total Vornado shareholder's equity

 6,231,627 

 6,242,769 

Noncontrolling interest in consolidated subsidiaries

 407,286 

 406,637 

Total equity

 6,638,913 

 6,649,406 

$

 19,890,877 

$

 20,185,472 

See notes to the consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

For the Six

Months Ended June 30,

Months Ended June 30,

2010 

2009 

2010 

2009 

(Amounts in thousands, except per share amounts)

REVENUES:

Property rentals

$

 575,776 

$

 554,516 

$

 1,136,726 

$

 1,104,303 

Tenant expense reimbursements

 88,080 

 83,375 

 181,001 

 181,404 

Fee and other income

 32,249 

 35,899 

 74,709 

 66,649 

Total revenues

 696,105 

 673,790 

 1,392,436 

 1,352,356 

EXPENSES:

Operating

 267,925 

 269,711 

 546,980 

 548,609 

Depreciation and amortization

 135,265 

 136,686 

 271,089 

 268,342 

General and administrative

 49,582 

 49,632 

 98,312 

 128,697 

Litigation loss accrual and acquisition costs

 1,930 

 - 

 11,986 

 - 

Total expenses

 454,702 

 456,029 

 928,367 

 945,648 

Operating income

 241,403 

 217,761 

 464,069 

 406,708 

Income applicable to Alexander's

 7,066 

 6,614 

 13,526 

 24,747 

(Loss) income applicable to Toys "R" Us

 (21,004)

 (327)

 104,866 

 96,820 

(Loss) income from partially owned entities

 (2,614)

 (22,797)

 2,270 

 (30,340)

Interest and other investment income (loss), net

 3,876 

 (98,153)

 18,584 

 (84,094)

Interest and debt expense (including amortization of deferred

financing costs of $4,543 and $4,313 in each three-month

period, respectively, and $8,969 and $8,732 in each six-month

period, respectively)

 (149,887)

 (159,063)

 (289,622)

 (316,823)

Net (loss) gain on early extinguishment of debt

 (1,072)

 17,684 

 (1,072)

 23,589 

Net gains on disposition of wholly owned and partially owned

assets other than depreciable real estate

 4,382 

 - 

 7,687 

 - 

Income (loss) before income taxes

 82,150 

 (38,281)

 320,308 

 120,607 

Income tax expense

 (4,939)

 (5,457)

 (10,553)

 (10,506)

Income (loss) from continuing operations

 77,211 

 (43,738)

 309,755 

 110,101 

Income from discontinued operations

 - 

 3,363 

 - 

 5,955 

Net income (loss)

 77,211 

 (40,375)

 309,755 

 116,056 

Net (income) loss attributable to noncontrolling interests, including

unit distributions

 (5,105)

 2,740 

 (23,097)

 (13,581)

Net income (loss) attributable to Vornado

 72,106 

 (37,635)

 286,658 

 102,475 

Preferred share dividends

 (14,266)

 (14,269)

 (28,533)

 (28,538)

NET INCOME (LOSS) attributable to common shareholders

$

 57,840 

$

 (51,904)

$

 258,125 

$

 73,937 

INCOME (LOSS) PER COMMON SHARE - BASIC:

Income (loss) from continuing operations, net

$

 0.32 

$

 (0.32)

$

 1.42 

$

 0.41 

Income from discontinued operations, net

 - 

 0.02 

 - 

 0.04 

Net income (loss) per common share

$

 0.32 

$

 (0.30)

$

 1.42 

$

 0.45 

Weighted average shares

 182,027 

 171,530 

 181,786 

 164,009 

INCOME (LOSS) PER COMMON SHARE - DILUTED:

Income (loss) from continuing operations, net

$

 0.31 

$

 (0.32)

$

 1.41 

$

 0.41 

Income from discontinued operations, net

 - 

 0.02 

 - 

 0.04 

Net income (loss) per common share

$

 0.31 

$

 (0.30)

$

 1.41 

$

 0.45 

Weighted average shares

 183,644 

 171,530 

 183,598 

 165,183 

DIVIDENDS PER COMMON SHARE

$

 0.65 

$

 0.95 

$

 1.30 

$

 1.90 

See notes to consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

Accumulated

(Amounts in thousands)

Earnings

Other

Non-

Preferred Shares

Common Shares

Additional

Less Than

Comprehensive

controlling

Total

Shares

Amount

Shares

Amount

Capital

Distributions

Income (Loss)

Interests

Equity

Balance, December 31, 2008

 33,954 

$

 823,807 

 155,286 

$

 6,195 

$

 6,025,976 

$

 (1,047,340)

$

 (6,899)

$

 412,913 

$

 6,214,652 

Net income (loss)

 - 

 - 

 - 

 - 

 - 

 102,475 

 - 

 (3,700)

 98,775 

Dividends paid on common

shares

 - 

 - 

 4,849 

 194 

 188,792 

 (315,159)

 - 

 - 

 (126,173)

Dividends paid on preferred

shares

 - 

 - 

 - 

 - 

 - 

 (28,540)

 - 

 - 

 (28,540)

Proceeds from the issuance of

common shares

 - 

 - 

 17,250 

 690 

 709,536 

 - 

 - 

 - 

 710,226 

Conversion of Series A

preferred shares to common

shares

 (2)

 (89)

 2 

 - 

 89 

 - 

 - 

 - 

 - 

Deferred compensation shares

and options

 - 

 - 

 - 

 2 

 9,967 

 - 

 - 

 - 

 9,969 

Common shares issued:

Upon redemption of Class A

Operating Partnership units,

at redemption value

 - 

 - 

 1,167 

 46 

 49,944 

 - 

 - 

 - 

 49,990 

Under employees' share

option plan

 - 

 - 

 8 

 (14)

 548 

 (351)

 - 

 - 

 183 

Change in unrealized net gain

or loss on securities

available-for-sale

 - 

 - 

 - 

 - 

 - 

 - 

 (12,213)

 - 

 (12,213)

Our share of partially owned

entities OCI adjustments

 - 

 - 

 - 

 - 

 - 

 - 

 (16,556)

 - 

 (16,556)

Voluntary surrender of equity

awards on March 31, 2009

 - 

 - 

 - 

 - 

 32,588 

 - 

 - 

 - 

 32,588 

Adjustments to redeemable

Class A Operating Partnership

units

 - 

 - 

 - 

 - 

 194,183 

 - 

 - 

 - 

 194,183 

Other

 - 

 - 

 - 

 - 

 (646)

 6 

 (183)

 (4,086)

 (4,909)

Balance, June 30, 2009

 33,952 

$

 823,718 

 178,562 

$

 7,113 

$

 7,210,977 

$

 (1,288,909)

$

 (35,851)

$

 405,127 

$

 7,122,175