x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:   

September 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

September 30, 2010 and December 31, 2009

3

Consolidated Statements of Income (Unaudited) for the

Three and Nine Months Ended September 30, 2010 and 2009

4

Consolidated Statements of Changes in Equity (Unaudited)

for the Nine Months Ended September 30, 2010 and 2009

5

Consolidated Statements of Cash Flows (Unaudited)

for the Nine Months Ended September 30, 2010 and 2009

6

Notes to Consolidated Financial Statements (Unaudited)

8

Report of Independent Registered Public Accounting Firm

36

Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

Item 4.

Controls and Procedures

72

Part II.

Other Information:

Item 1.

Legal Proceedings

73

Item 1A.

Risk Factors

74

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

74

Item 3.

Defaults Upon Senior Securities

74

Item 5.

Other Information

74

Item 6.

Exhibits

74

Signatures

75

Exhibit Index

76

VORNADO REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

September 30,

December 31,

ASSETS

2010 

2009 

Real estate, at cost:

Land

$

 4,619,205 

$

 4,606,065 

Buildings and improvements

 13,092,999 

 12,902,086 

Development costs and construction in progress

 202,841 

 313,310 

Leasehold improvements and equipment

 128,004 

 128,056 

Total

 18,043,049 

 17,949,517 

Less accumulated depreciation and amortization

 (2,772,079)

 (2,494,441)

Real estate, net

 15,270,970 

 15,455,076 

Real Estate Fund investments (see Note 4)

 62,500 

 - 

Cash and cash equivalents

 846,254 

 535,479 

Restricted cash

 148,246 

 293,950 

Short-term investments

 - 

 40,000 

Marketable securities

 355,800 

 380,652 

Accounts receivable, net of allowance for doubtful accounts of $56,894 and $46,708

 192,895 

 157,325 

Investments in partially owned entities

 953,011 

 799,832 

Investment in Toys "R" Us

 457,141 

 409,453 

Mezzanine loans receivable, net of allowance of $133,216 and $190,738

 144,473 

 203,286 

Receivable arising from the straight-lining of rents, net of allowance of $5,901 and $4,680

 726,248 

 681,526 

Deferred leasing and financing costs, net of accumulated amortization of $214,199 and $183,224

 353,847 

 311,825 

Due from officers

 13,182 

 13,150 

Identified intangible assets, net of accumulated amortization of $354,199 and $312,957

 385,337 

 442,510 

Other assets

 724,224 

 461,408 

$

 20,634,128 

$

 20,185,472 

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Notes and mortgages payable

$

 8,992,805 

$

 8,445,766 

Senior unsecured notes

 1,231,196 

 711,716 

Exchangeable senior debentures

 489,332 

 484,457 

Convertible senior debentures

 396,714 

 445,458 

Revolving credit facility debt

 - 

 852,218 

Accounts payable and accrued expenses

 507,755 

 475,242 

Deferred credit

 632,427 

 682,384 

Deferred compensation plan

 88,559 

 80,443 

Deferred tax liabilities

 17,648 

 17,842 

Other liabilities

 372,695 

 88,912 

Total liabilities

 12,729,131 

 12,284,438 

Commitments and contingencies

Redeemable noncontrolling interests:

Class A units - 13,530,016 and 13,892,313 units outstanding

 1,157,222 

 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

 1,417,222 

 1,251,628 

Vornado shareholders' equity:

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

shares; issued and outstanding 32,348,784 and 33,952,324 shares

 783,527 

 823,686 

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

250,000,000 shares; issued and outstanding 182,670,995 and 181,214,161 shares

 7,277 

 7,218 

Additional capital

 6,809,905 

 6,961,007 

Earnings less than distributions

 (1,604,889)

 (1,577,591)

Accumulated other comprehensive income

 45,272 

 28,449 

Total Vornado shareholders' equity

 6,041,092 

 6,242,769 

Noncontrolling interest in consolidated subsidiaries

 446,683 

 406,637 

Total equity

 6,487,775 

 6,649,406 

$

 20,634,128 

$

 20,185,472 

See notes to the consolidated financial statements (unaudited).

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

For the Three

For the Nine

Months Ended September 30,

Months Ended September 30,

2010 

2009 

2010 

2009 

(Amounts in thousands, except per share amounts)

REVENUES:

Property rentals

$

 576,896 

$

 550,054 

$

 1,713,622 

$

 1,654,357 

Tenant expense reimbursements

 97,835 

 89,530 

 278,836 

 270,934 

Fee and other income

 32,301 

 31,635 

 107,010 

 98,284 

Total revenues

 707,032 

 671,219 

 2,099,468 

 2,023,575 

EXPENSES:

Operating

 281,548 

 265,952 

 828,528 

 814,561 

Depreciation and amortization

 134,755 

 130,503 

 405,844 

 398,845 

General and administrative

 56,557 

 51,684 

 154,869 

 180,381 

Litigation loss accrual, impairment losses and acquisition costs

 5,921 

 - 

 17,907 

 - 

Total expenses

 478,781 

 448,139 

 1,407,148 

 1,393,787 

Operating income

 228,251 

 223,080 

 692,320 

 629,788 

(Loss) income applicable to Toys "R" Us

 (2,557)

 22,077 

 102,309 

 118,897 

(Loss) income from partially owned entities

 (1,996)

 2,513 

 13,800 

 (3,080)

(Loss) from Real Estate Fund (of which $1,091 is allocated

to noncontrolling interests)

 (1,410)

 - 

 (1,410)

 - 

Interest and other investment income (loss), net

 47,352 

 20,486 

 65,936 

 (63,608)

Interest and debt expense (including amortization of deferred

financing costs of $5,200 and $4,350 in each three-month

period, respectively, and $14,169 and $12,722 in each nine-month

period, respectively)

 (152,358)

 (158,205)

 (441,980)

 (475,028)

Net (loss) gain on early extinguishment of debt

 (724)

 3,407 

 (1,796)

 26,996 

Net gain on disposition of wholly owned and partially owned

assets other than depreciable real estate

 5,072 

 4,432 

 12,759 

 4,432 

Income before income taxes

 121,630 

 117,790 

 441,938 

 238,397 

Income tax expense

 (5,498)

 (5,267)

 (16,051)

 (15,773)

Income from continuing operations

 116,132 

 112,523 

 425,887 

 222,624 

Income from discontinued operations

 - 

 43,321 

 - 

 49,276 

Net income

 116,132 

 155,844 

 425,887 

 271,900 

Net income attributable to noncontrolling interests, including

unit distributions

 (11,880)

 (15,227)

 (34,977)

 (28,808)

Net income attributable to Vornado

 104,252 

 140,617 

 390,910 

 243,092 

Preferred share dividends

 (13,442)

 (14,269)

 (41,975)

 (42,807)

Discount on preferred share redemptions

 4,382 

 - 

 4,382 

 - 

NET INCOME attributable to common shareholders

$

 95,192 

$

 126,348 

$

 353,317 

$

 200,285 

INCOME PER COMMON SHARE - BASIC:

Income from continuing operations, net

$

 0.52 

$

 0.48 

$

 1.94 

$

 0.91 

Income from discontinued operations, net

 - 

 0.23 

 - 

 0.27 

Net income per common share

$

 0.52 

$

 0.71 

$

 1.94 

$

 1.18 

Weighted average shares

 182,462 

 178,689 

 182,014 

 168,820 

INCOME PER COMMON SHARE - DILUTED:

Income from continuing operations, net

$

 0.52 

$

 0.48 

$

 1.92 

$

 0.90 

Income from discontinued operations, net

 - 

 0.22 

 - 

 0.27 

Net income per common share

$

 0.52 

$

 0.70 

$

 1.92 

$

 1.17 

Weighted average shares

 184,168 

 180,977 

 183,826 

 170,378 

DIVIDENDS PER COMMON SHARE

$

 0.65 

$

 0.65 

$

 1.95 

$

 2.55 

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)

 - 

 - 

 - 

 - 

 - 

 243,092 

 - 

 (3,442)

 239,650 

Dividends paid on common

shares

 - 

 - 

 5,736 

 230 

 236,920 

 (431,237)

 - 

 - 

 (194,087)

Dividends paid on preferred

shares

 - 

 - 

 - 

 - 

 - 

 (42,809)

 - 

 - 

 (42,809)

Common shares issued:

In connection with April 2009

public offering

 - 

 - 

 17,250 

 690 

 709,536 

 - 

 - 

 - 

 710,226 

Upon redemption of Class A

units, at redemption value

 - 

 - 

 1,222 

 48 

 53,043 

 - 

 - 

 - 

 53,091 

Under employees' share

option plan

 - 

 - 

 28 

 (14)

 1,219 

 (440)

 - 

 - 

 765 

Conversion of Series A

preferred shares to common

shares

 (2)

 (89)

 2 

 - 

 89 

 - 

 - 

 - 

 - 

Deferred compensation shares

and options

 - 

 - 

 - 

 2 

 11,527 

 - 

 - 

 - 

 11,529 

Change in unrealized net gain

or loss on securities

available-for-sale

 - 

 - 

 - 

 - 

 - 

 - 

 4,099 

 - 

 4,099 

Our share of partially owned

entities OCI adjustments

 - 

 - 

 - 

 - 

 - 

 - 

 11,846 

 - 

 11,846 

Voluntary surrender of equity

awards on March 31, 2009

 - 

 - 

 - 

 - 

 32,588 

 - 

 - 

 - 

 32,588 

Adjustments to carry redeemable

Class A units at redemption value

 - 

 - 

 - 

 - 

 (77,004)

 - 

 - 

 - 

 (77,004)

Other

 - 

 - 

 - 

 - 

 (763)

 7 

 7,443 

 (3,325)

 3,362 

Balance, September 30, 2009

 33,952 

$

 823,718 

 179,524 

$

 7,151 

$

 6,993,131 

$

 (1,278,727)

$

 16,489 

$

 406,146 

$

 6,967,908 

Balance, December 31, 2009

 33,952 

$