UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 FORM 10-Q
(Mark one)
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2023
Or
☐
TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterlytransition period ended: from:September 30, 2017to
 Or
☐
TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:Commission File Number:001-11954to(Vornado Realty Trust)
Commission File Number:001-34482(Vornado Realty L.P.)

Vornado Realty Trust
Vornado Realty L.P.
Commission File Number:001-11954 (Vornado Realty Trust)
Commission File Number:001-34482 (Vornado Realty L.P.)
Vornado Realty Trust
Vornado Realty L.P.
(Exact name of registrants as specified in its charter)
Vornado Realty TrustMaryland22-1657560
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
Vornado Realty TrustL.P.MarylandDelaware22-165756013-3925979
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
Vornado Realty L.P.Delaware13-3925979
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
888 Seventh Avenue,New York,New York10019
(Address of principal executive offices) (Zip Code)
(212)894-7000
(Registrants’ telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
N/ARegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
(Former name, former address and former fiscal year, if changed since last report)Vornado Realty TrustCommon Shares of beneficial interest, $.04 par value per shareVNONew York Stock Exchange
Cumulative Redeemable Preferred Shares of beneficial interest, liquidation preference $25.00 per share:
Vornado Realty Trust5.40% Series LVNO/PLNew York Stock Exchange
Vornado Realty Trust5.25% Series MVNO/PMNew York Stock Exchange
Vornado Realty Trust5.25% Series NVNO/PNNew York Stock Exchange
Vornado Realty Trust4.45% Series OVNO/PONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Vornado Realty Trust: Yes☑ No ☐    Vornado Realty L.P.: Yes☑ No ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Vornado Realty Trust: Yes☑ No ☐   Vornado Realty L.P.: Yes☑ No ☐



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer," “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Vornado Realty Trust:
☑Large Accelerated Filer☐Accelerated Filer
☐Non-Accelerated Filer☐Smaller Reporting Company
Vornado Realty Trust:☐
☑Large Accelerated Filer
☐Accelerated Filer
☐Non-Accelerated Filer (Do not check if smaller reporting company)
☐Smaller Reporting Company
☐Emerging Growth Company
Vornado Realty L.P.:
☐   Large Accelerated Filer
☐Accelerated Filer
☑ Non-Accelerated Filer (Do not check if smaller reporting company)
☐Smaller Reporting Company
☐Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Vornado Realty L.P.:
☐Large Accelerated Filer☐Accelerated Filer
☑Non-Accelerated Filer☐Smaller Reporting Company
☐Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
Vornado Realty Trust: Yes☐  No ☑    Vornado Realty L.P.: Yes☐  No ☑ 
As of September 30, 2017, 189,877,859March 31, 2023, 191,880,615 of Vornado Realty Trust’s common shares of beneficial interest are outstanding.



EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2017March 31, 2023 of Vornado Realty Trust and Vornado Realty L.P. Unless stated otherwise or the context otherwise requires, references to “Vornado” refer to Vornado Realty Trust, a Maryland real estate investment trust (“REIT”), and references to the “Operating Partnership” and “VRLP” refer to Vornado Realty L.P., a Delaware limited partnership. References to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.

The Operating Partnership is the entity through which we conduct substantially all of our business and own, either directly or through subsidiaries, substantially all of our assets. Vornado is the sole general partner and also a 93.5% 91.4%limited partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Vornado has exclusive control of the Operating Partnership’s day-to-day management.

Under the limited partnership agreement of the Operating Partnership, unitholders may present their Class A units for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Class A units may be tendered for redemption to the Operating Partnership for cash; Vornado, at its option, may assume that obligation and pay the holder either cash or Vornado common shares on a one-for-one basis. Because the number of Vornado common shares outstanding at all times equals the number of Class A units owned by Vornado, the redemption value of each Class A unit is equivalent to the market value of one Vornado common share, and the quarterly distribution to a Class A unitholder is equal to the quarterly dividend paid to a Vornado common shareholder. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. Vornado generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having the Operating Partnership pay cash. With each such exchange or redemption, Vornado’s percentage ownership in the Operating Partnership will increase. In addition, whenever Vornado issues common shares other than to acquire Class A units of the Operating Partnership, Vornado must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to Vornado an equivalent number of Class A units of the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company believes that combining the quarterly reports on Form 10-Q of Vornado and the Operating Partnership into this single report provides the following benefits:

•enhances investors’ understanding of Vornado and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both Vornado and the Operating Partnership; and
•creates time and cost efficiencies in the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between Vornado and the Operating Partnership in the context of how Vornado and the Operating Partnership operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of Vornado. Vornado does not have any significant assets, liabilities or operations, other than its investment in the Operating Partnership. The Operating Partnership, not Vornado, generally executes all significant business relationships other than transactions involving the securities of Vornado. The Operating Partnership holds substantially all of the assets of Vornado. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by Vornado, which are contributed to the capital of the Operating Partnership in exchange for Class A units of limited partnership in the Operating Partnership, and the net proceeds of debt offerings by Vornado, which are contributed to the Operating Partnership in exchange for debt securities of the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit facility,facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.



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To help investors better understand the key differences between Vornado and the Operating Partnership, certain information for Vornado and the Operating Partnership in this report has been separated, as set forth below:
•Item 1. Financial Statements (unaudited), which includes the following specific disclosures for Vornado Realty Trust and Vornado Realty L.P.:
•Note 10. Redeemable Noncontrolling Interests/Redeemable Partnership Units
Interests
•Note 18. (Loss)11. Shareholders' Equity/Partners' Capital
•Note 17. Income Per Share/(Loss) Income Per Class A Unit
•Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable.

This report also includes separate Part I, Item 4. Controls and Procedures and Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds sections and separate Exhibits 31 and 32 certifications for each of Vornado and the Operating Partnership in order to establish that the requisite certifications have been made and that Vornado and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

4


3


PART I.Financial Information:Page Number
PART I.Financial Information:Page Number
Item 1.
Financial Statements of Vornado Realty Trust:
Consolidated Balance Sheets (Unaudited) as of September 30, 2017March 31, 2023 and December 31, 20162022
56
Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
67
Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
78
Consolidated Statements of Changes in Equity (Unaudited) for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
89
Consolidated Statements of Cash Flows (Unaudited) for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
1011
Consolidated Balance Sheets (Unaudited) as of September 30, 2017March 31, 2023 and December 31, 20162022
1213
Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
1314
Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
1415
Consolidated Statements of Changes in Equity (Unaudited) for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
1516
Consolidated Statements of Cash Flows (Unaudited) for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
1718
Vornado Realty Trust and Vornado Realty L.P.:
1920
5040
5242
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
9258
9360
PART II.Other Information:
9460
9460
9460
9460
9460
9460
9460
9661
9562
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)



(Amounts in thousands, except unit, share, and per share amounts)As of
March 31, 2023December 31, 2022
ASSETS
Real estate, at cost:
Land$2,451,828 $2,451,828 
Buildings and improvements9,838,757 9,804,204 
Development costs and construction in progress1,058,518 933,334 
Leasehold improvements and equipment125,982 125,389 
Total13,475,085 13,314,755 
Less accumulated depreciation and amortization(3,546,942)(3,470,991)
Real estate, net9,928,143 9,843,764 
Right-of-use assets685,152 684,380 
Cash and cash equivalents890,957 889,689 
Restricted cash142,882 131,468 
Investments in U.S. Treasury bills276,645 471,962 
Tenant and other receivables95,034 81,170 
Investments in partially owned entities2,633,558 2,665,073 
220 Central Park South condominium units ready for sale37,644 43,599 
Receivable arising from the straight-lining of rents691,271 694,972 
Deferred leasing costs, net of accumulated amortization of $239,454 and $237,395366,960 373,555 
Identified intangible assets, net of accumulated amortization of $100,616 and $98,139137,161 139,638 
Other assets387,011 474,105 
 $16,272,418 $16,493,375 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net$5,717,338 $5,829,018 
Senior unsecured notes, net1,192,342 1,191,832 
Unsecured term loan, net793,517 793,193 
Unsecured revolving credit facilities575,000 575,000 
Lease liabilities740,301 735,969 
Accounts payable and accrued expenses441,741 450,881 
Deferred revenue37,879 39,882 
Deferred compensation plan98,996 96,322 
Other liabilities312,107 268,166 
Total liabilities9,909,221 9,980,263 
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 14,817,410 and 14,416,891 units outstanding348,208 345,157 
Series D cumulative redeemable preferred units - 141,400 units outstanding3,535 3,535 
Total redeemable noncontrolling partnership units351,743 348,692 
Redeemable noncontrolling interest in a consolidated subsidiary78,796 88,040 
Total redeemable noncontrolling interests430,539 436,732 
Shareholders' equity:
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 48,792,902 shares1,182,459 1,182,459 
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,880,615 and 191,866,880 shares7,654 7,654 
Additional capital8,367,349 8,369,228 
Earnings less than distributions(3,961,392)(3,894,580)
Accumulated other comprehensive income95,562 174,967 
Total shareholders' equity5,691,632 5,839,728 
Noncontrolling interests in consolidated subsidiaries241,026 236,652 
Total equity5,932,658 6,076,380 
 $16,272,418 $16,493,375 
See notes to consolidated financial statements (unaudited).
6
(Amounts in thousands, except unit, share, and per share amounts)September 30, 2017 December 31, 2016
ASSETS   
Real estate, at cost:   
Land$3,124,971
 $3,130,825
Buildings and improvements9,824,618
 9,684,144
Development costs and construction in progress1,536,290
 1,278,941
Leasehold improvements and equipment96,820
 93,910
Total14,582,699
 14,187,820
Less accumulated depreciation and amortization(2,805,160) (2,581,514)
Real estate, net11,777,539
 11,606,306
Cash and cash equivalents1,282,230
 1,501,027
Restricted cash103,553
 95,032
Marketable securities193,145
 203,704
Tenant and other receivables, net of allowance for doubtful accounts of $5,539 and $6,70854,769
 61,069
Investments in partially owned entities1,064,982
 1,378,254
Real estate fund investments351,750
 462,132
Receivable arising from the straight-lining of rents, net of allowance of $1,215 and $2,227917,827
 885,167
Deferred leasing costs, net of accumulated amortization of $186,041 and $170,952354,573
 354,997
Identified intangible assets, net of accumulated amortization $144,683 and $194,422166,198
 189,668
Assets related to discontinued operations1,774
 3,568,613
Other assets573,780
 508,878
 $16,842,120
 $20,814,847
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY   
Mortgages payable, net$8,131,606
 $8,113,248
Senior unsecured notes, net846,641
 845,577
Unsecured term loan, net373,354
 372,215
Unsecured revolving credit facilities—
 115,630
Accounts payable and accrued expenses412,100
 397,134
Deferred revenue240,377
 276,276
Deferred compensation plan106,244
 121,183
Liabilities related to discontinued operations3,602
 1,259,443
Other liabilities469,919
 417,199
Total liabilities10,583,843
 11,917,905
Commitments and contingencies
 
Redeemable noncontrolling interests:   
Class A units - 12,555,623 and 12,197,162 units outstanding965,276
 1,273,018
Series D cumulative redeemable preferred units - 177,101 units outstanding5,428
 5,428
Total redeemable noncontrolling interests970,704
 1,278,446
Vornado's shareholders' equity:   
Preferred shares of beneficial interest: no par value per share; authorized 110,000,000 shares; issued and outstanding 42,823,428 and 42,824,829 shares1,038,011
 1,038,055
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 189,877,859 and 189,100,876 shares7,571
 7,542
Additional capital7,501,823
 7,153,332
Earnings less than distributions(4,098,127) (1,419,382)
Accumulated other comprehensive income121,801
 118,972
Total Vornado shareholders' equity4,571,079
 6,898,519
Noncontrolling interests in consolidated subsidiaries716,494
 719,977
Total equity5,287,573
 7,618,496
 $16,842,120
 $20,814,847

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(Amounts in thousands, except per share amounts)For the Three Months Ended March 31,
20232022
REVENUES:
Rental revenues$396,793 $397,283 
Fee and other income49,130 44,847 
Total revenues445,923 442,130 
EXPENSES:
Operating(228,773)(216,529)
Depreciation and amortization(106,565)(117,443)
General and administrative(41,595)(41,216)
(Expense) benefit from deferred compensation plan liability(3,728)1,944 
Transaction related costs and other(658)(1,005)
Total expenses(381,319)(374,249)

Income from partially owned entities16,666 33,714 
(Loss) income from real estate fund investments(19)5,674 
Interest and other investment income, net9,603 1,018 
Income (loss) from deferred compensation plan assets3,728 (1,944)
Interest and debt expense(86,237)(52,109)
Net gains on disposition of wholly owned and partially owned assets7,520 6,552 
Income before income taxes15,865 60,786 
Income tax expense(4,667)(7,411)
Net income11,198 53,375 
Less net loss (income) attributable to noncontrolling interests in:
Consolidated subsidiaries9,928 (9,374)
Operating Partnership(429)(1,994)
Net income attributable to Vornado20,697 42,007 
Preferred share dividends(15,529)(15,529)
NET INCOME attributable to common shareholders$5,168 $26,478 
INCOME PER COMMON SHARE - BASIC:
Net income per common share$0.03 $0.14 
Weighted average shares outstanding191,869 191,724 
INCOME PER COMMON SHARE - DILUTED:
Net income per common share$0.03 $0.14 
Weighted average shares outstanding191,881 192,038 
See notes to consolidated financial statements (unaudited).
7
(Amounts in thousands, except per share amounts)Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
REVENUES:       
Property rentals$432,062
 $411,153
 $1,275,597
 $1,238,903
Tenant expense reimbursements63,401
 60,957
 174,091
 162,831
Fee and other income33,292
 30,643
 98,212
 88,034
Total revenues528,755
 502,753
 1,547,900
 1,489,768
EXPENSES:       
Operating225,226
 213,762
 661,585
 626,546
Depreciation and amortization104,972
 105,877
 315,223
 316,383
General and administrative36,261
 33,584
 122,161
 112,593
Acquisition and transaction related costs61
 1,069
 1,073
 6,697
Total expenses366,520
 354,292
 1,100,042
 1,062,219
Operating income162,235
 148,461
 447,858
 427,549
(Loss) income from partially owned entities(41,801) 3,811
 5,578
 3,892
(Loss) income from real estate fund investments(6,308) 1,077
 (1,649) 28,750
Interest and other investment income, net9,306
 6,459
 27,800
 20,121
Interest and debt expense(85,068) (79,721) (252,581) (250,034)
Net gains on disposition of wholly owned and partially owned assets—
 —
 501
 160,225
Income before income taxes38,364
 80,087
 227,507
 390,503
Income tax expense(1,188) (4,563) (2,429) (8,921)
Income from continuing operations37,176
 75,524
 225,078
 381,582
(Loss) income from discontinued operations(47,930) 25,080
 (14,501) (104,204)
Net (loss) income(10,754) 100,604
 210,577
 277,378
Less net (income) loss attributable to noncontrolling interests in:       
Consolidated subsidiaries(4,022) (3,658) (18,436) (26,361)
Operating Partnership1,878
 (4,366) (9,057) (11,410)
Net (loss) income attributable to Vornado(12,898) 92,580
 183,084
 239,607
Preferred share dividends(16,128) (19,047) (48,386) (59,774)
Preferred share issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
NET (LOSS) INCOME attributable to common shareholders$(29,026) $66,125
 $134,698
 $172,425
        
(LOSS) INCOME PER COMMON SHARE – BASIC:       
Income from continuing operations, net$0.09
 $0.23
 $0.78
 $1.43
(Loss) income from discontinued operations, net(0.24) 0.12
 (0.07) (0.52)
Net (loss) income per common share$(0.15) $0.35
 $0.71
 $0.91
Weighted average shares outstanding189,593
 188,901
 189,401
 188,778
        
(LOSS) INCOME PER COMMON SHARE – DILUTED:       
Income from continuing operations, net$0.09
 $0.23
 $0.78
 $1.42
(Loss) income from discontinued operations, net(0.24) 0.12
 (0.07) (0.51)
Net (loss) income per common share$(0.15) $0.35
 $0.71
 $0.91
Weighted average shares outstanding190,847
 190,048
 191,257
 190,086
        
DIVIDENDS PER COMMON SHARE$0.60
 $0.63
 $2.02
 $1.89

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Net income$11,198 $53,375 
Other comprehensive (loss) income:
Change in fair value of consolidated interest rate swaps and other(81,536)65,239 
Other comprehensive (loss) income of nonconsolidated subsidiaries(3,329)9,205 
Comprehensive (loss) income(73,667)127,819 
Less comprehensive loss (income) attributable to noncontrolling interests15,838 (16,502)
Comprehensive (loss) income attributable to Vornado$(57,829)$111,317 
See notes to consolidated financial statements (unaudited).
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(Amounts in thousands)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Net (loss) income$(10,754) $100,604
 $210,577
 $277,378
Other comprehensive income (loss):       
Increase (reduction) in unrealized net gain on available-for-sale securities5,656
 3,685
 (10,559) 42,798
Pro rata share of amounts reclassified from accumulated other comprehensive income of a nonconsolidated subsidiary(646) —
 8,622
 —
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries(626) (915) (1,657) (1,537)
Increase (reduction) in value of interest rate swaps and other1,973
 7,689
 6,611
 (3,482)
Comprehensive (loss) income(4,397) 111,063
 213,594
 315,157
Less comprehensive income attributable to noncontrolling interests(2,539) (8,665) (27,681) (40,097)
Comprehensive (loss) income attributable to Vornado$(6,936) $102,398
 $185,913
 $275,060

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

(Amounts in thousands, except per share amounts)Non-controlling Interests in Consolidated Subsidiaries
Accumulated
Other
Comprehensive
Income
Preferred SharesCommon SharesAdditional CapitalEarnings Less Than DistributionsTotal Equity
SharesAmountSharesAmount
For the Three Months Ended
March 31, 2023:
Balance as of December 31, 202248,793 $1,182,459 191,867 $7,654 $8,369,228 $(3,894,580)$174,967 $236,652 $6,076,380 
Net income attributable to Vornado— — — — — 20,697 — — 20,697 
Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries— — — — — — — (684)(684)
Dividends on common shares
($0.375 per share)
— — — — — (71,950)— — (71,950)
Dividends on preferred shares (see Note 11 for dividends per share amounts)— — — — — (15,529)— — (15,529)
Common shares issued:
Upon redemption of Class A units, at redemption value— — 9 — 187 — — — 187 
Under dividend reinvestment plan— — 6 — 146 — — — 146 
Contributions— — — — — — — 6,128 6,128 
Distributions— — — — — — — (811)(811)
Deferred compensation shares and options— — (1)— 84 (30)— — 54 
Other comprehensive loss of nonconsolidated subsidiaries— — — — — — (3,329)— (3,329)
Change in fair value of consolidated interest rate swaps and other— — — — — — (81,536)— (81,536)
Unearned 2020 Out-Performance Plan and 2019 Performance AO LTIP awards— — — — 20,668 — — — 20,668 
Redeemable Class A unit measurement adjustment— — — — (22,964)— (879)— (23,843)
Noncontrolling interests' share of other comprehensive loss— — — — — — 6,339 (259)6,080 
Balance as of March 31, 202348,793 $1,182,459 191,881 $7,654 $8,367,349 $(3,961,392)$95,562 $241,026 $5,932,658 
See notes to consolidated financial statements (unaudited).
9
(Amounts in thousands)                  
  Preferred Shares Common Shares Additional Capital Earnings Less Than Distributions Accumulated Other Comprehensive Income Non-controlling Interests in Consolidated Subsidiaries Total Equity
  Shares Amount Shares Amount     
Balance, December 31, 2016 42,825
 $1,038,055
 189,101
 $7,542
 $7,153,332
 $(1,419,382) $118,972
 $719,977
 $7,618,496
Net income attributable to Vornado —
 —
 —
 —
 —
 183,084
 —
 —
 183,084
Net income attributable to noncontrolling interests in consolidated subsidiaries —
 —
 —
 —
 —
 —
 —
 18,436
 18,436
Dividends on common shares —
 —
 —
 —
 —
 (382,552) —
 —
 (382,552)
Dividends on preferred shares —
 —
 —
 —
 —
 (48,386) —
 —
 (48,386)
Common shares issued:                  
Upon redemption of Class A units, at redemption value —
 —
 349
 14
 34,550
 —
 —
 —
 34,564
Under employees' share option plan —
 —
 409
 15
 23,877
 —
 —
 —
 23,892
Under dividend reinvestment plan —
 —
 12
 —
 1,119
 —
 —
 —
 1,119
Contributions —
 —
 —
 —
 —
 —
 —
 1,044
 1,044
Distributions:                  
JBG SMITH Properties —
 —
 —
 —
 —
 (2,430,427) —
 —
 (2,430,427)
Real estate fund investments —
 —
 —
 —
 —
 —
 —
 (20,851) (20,851)
Other —
 —
 —
 —
 —
 —
 —
 (1,815) (1,815)
Conversion of Series A preferred shares to common shares (2) (44) 2
 —
 44
 —
 —
 —
 —
Deferred compensation shares and options —
 —
 1
 —
 1,975
 (418) —
 —
 1,557
Reduction in unrealized net gain on available-for-sale securities —
 —
 —
 —
 —
 —
 (10,559) —
 (10,559)
Pro rata share of amounts reclassified related to a nonconsolidated subsidiary —
 —
 —
 —
 —
 —
 8,622
 —
 8,622
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries —
 —
 —
 —
 —
 —
 (1,657) —
 (1,657)
Increase in value of interest rate swaps —
 —
 —
 —
 —
 —
 6,611
 —
 6,611
Adjustments to carry redeemable Class A units at redemption value —
 —
 —
 —
 286,928
 —
 —
 —
 286,928
Redeemable noncontrolling interests' share of above adjustments —
 —
 ��
 —
 —
 —
 (188) —
 (188)
Other —
 —
 4
 —
 (2) (46) —
 (297) (345)
Balance, September 30, 2017 42,823
 $1,038,011
 189,878
 $7,571
 $7,501,823
 $(4,098,127) $121,801
 $716,494
 $5,287,573


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

(Amounts in thousands, except per share amounts)Accumulated
Other
Comprehensive (Loss) Income		Non-controlling Interests in Consolidated Subsidiaries
Preferred SharesCommon SharesAdditional CapitalEarnings Less Than DistributionsTotal Equity
SharesAmountSharesAmount
For the Three Months Ended
March 31, 2022:
Balance as of December 31, 202148,793 $1,182,459 191,724 $7,648 $8,143,093 $(3,079,320)$(17,534)$278,892 $6,515,238 
Net income attributable to Vornado— — — — — 42,007 — — 42,007 
Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries— — — — — — — 9,679 9,679 
Dividends on common shares
($0.53 per share)
— — — — — (101,616)— — (101,616)
Dividends on preferred shares (see Note 11 for dividends per share amounts)— — — — — (15,529)— — (15,529)
Common shares issued:
Upon redemption of Class A units, at redemption value— — 16 1 716 — — — 717 
Under employees' share option plan— — — — 7 — — — 7 
Under dividend reinvestment plan— — 5 — 212 — — — 212 
Contributions— — — — — — — 481 481 
Distributions— — — — — — — (35,961)(35,961)
Deferred compensation shares and options— — (2)— 146 (85)— — 61 
Other comprehensive income of nonconsolidated subsidiaries— — — — — — 9,205 — 9,205 
Change in fair value of consolidated interest rate swaps and other— — — — — — 65,239 — 65,239 
Redeemable Class A unit measurement adjustment— — — — (46,651)— — — (46,651)
Noncontrolling interests' share of other comprehensive income— — — — — — (5,134)— (5,134)
Other— — — — — (6)— 21 15 
Balance as of March 31, 202248,793 $1,182,459 191,743 $7,649 $8,097,523 $(3,154,549)$51,776 $253,112 $6,437,970 
See notes to consolidated financial statements (unaudited).
10
(Amounts in thousands)         
Additional
Capital
 
Earnings
Less Than
Distributions
 
Accumulated
Other
Comprehensive
Income
 
Non-
controlling
Interests in
Consolidated
Subsidiaries
 
Total
Equity
  Preferred Shares Common Shares     
  Shares Amount Shares Amount     
Balance, December 31, 2015 52,677
 $1,276,954
 188,577
 $7,521
 $7,132,979
 $(1,766,780) $46,921
 $778,483
 $7,476,078
Net income attributable to Vornado —
 —
 —
 —
 —
 239,607
 —
 —
 239,607
Net income attributable to noncontrolling interests in consolidated subsidiaries —
 —
 —
 —
 —
 —
 —
 26,361
 26,361
Dividends on common shares —
 —
 —
 —
 —
 (356,863) —
 —
 (356,863)
Dividends on preferred shares —
 —
 —
 —
 —
 (59,774) —
 —
 (59,774)
Redemption of Series J preferred shares (9,850) (238,842) —
 —
 —
 (7,408) —
 —
 (246,250)
Common shares issued:                  
Upon redemption of Class A units, at redemption value —
 —
 293
 12
 28,114
 —
 —
 —
 28,126
Under employees' share option plan —
 —
 106
 4
 5,936
 —
 —
 —
 5,940
Under dividend reinvestment plan —
 —
 12
 —
 1,080
 —
 —
 —
 1,080
Contributions —
 —
 —
 —
 —
 —
 —
 19,699
 19,699
Distributions:                  
Real estate fund investments —
 —
 —
 —
 —
 —
 —
 (59,843) (59,843)
Other —
 —
 —
 —
 —
 —
 —
 (11,631) (11,631)
Deferred compensation shares and options —
 —
 7
 1
 1,370
 (186) —
 —
 1,185
Increase in unrealized net gain on available-for-sale securities —
 —
 —
 —
 —
 —
 42,798
 —
 42,798
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries —
 —
 —
 —
 —
 —
 (1,537) —
 (1,537)
Reduction in value of interest rate swaps —
 —
 —
 —
 —
 —
 (3,482) —
 (3,482)
Adjustments to carry redeemable Class A units at redemption value —
 —
 —
 —
 (30,260) —
 —
 —
 (30,260)
Redeemable noncontrolling interests' share of above adjustments —
 —
 —
 —
 —
 —
 (2,326) —
 (2,326)
Other —
 (1) (1) (1) 1
 (7) —
 86
 78
Balance, September 30, 2016 42,827
 $1,038,111
 188,994
 $7,537
 $7,139,220
 $(1,951,411) $82,374
 $753,155
 $7,068,986

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Cash Flows from Operating Activities:
Net income$11,198 $53,375 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)112,578 122,271 
Distributions of income from partially owned entities38,706 37,778 
Equity in net income of partially owned entities(16,666)(33,714)
Stock-based compensation expense11,714 13,155 
Net gains on disposition of wholly owned and partially owned assets(7,520)(6,552)
Straight-lining of rents3,821 (21,335)
Change in deferred tax liability2,591 3,173 
Amortization of below-market leases, net(1,367)(917)
Net realized and unrealized income on real estate fund investments— (5,672)
Other non-cash adjustments2,072 2,035 
Changes in operating assets and liabilities:
Tenant and other receivables(13,862)(3,499)
Prepaid assets(72,347)29,451 
Other assets(6,746)(9,807)
Accounts payable and accrued expenses(1,411)(7,421)
Other liabilities29,111 (1,307)
Net cash provided by operating activities91,872 171,014 
Cash Flows from Investing Activities:
Proceeds from maturities of U.S. Treasury bills197,294 — 
Development costs and construction in progress(135,550)(209,738)
Proceeds from repayment of participation in 150 West 34th Street mortgage loan105,000 — 
Additions to real estate(57,032)(30,900)
Proceeds from sale of condominium units at 220 Central Park South14,216 15,095 
Distributions of capital from partially owned entities11,559 — 
Investments in partially owned entities(8,833)(4,571)
Acquisitions of real estate and other(1,000)— 
Purchase of U.S. Treasury bills— (645,920)
Proceeds from sales of real estate— 81,399 
Net cash provided by (used in) investing activities125,654 (794,635)
See notes to consolidated financial statements (unaudited).
11
(Amounts in thousands)For the Nine Months Ended
September 30,
 2017 2016
Cash Flows from Operating Activities:   
Net income$210,577
 $277,378
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of deferred financing costs)407,539
 446,040
Return of capital from real estate fund investments80,294
 71,888
Distributions of income from partially owned entities65,097
 56,853
Other non-cash adjustments43,921
 33,971
Straight-lining of rents(37,752) (118,798)
Amortization of below-market leases, net(35,446) (41,676)
Net realized and unrealized losses (gains) on real estate fund investments18,537
 (16,513)
Equity in net income of partially owned entities(6,013) (529)
Net gains on sale of real estate and other(3,797) (5,074)
Net gains on disposition of wholly owned and partially owned assets(501) (160,225)
Real estate impairment losses—
 161,165
Changes in operating assets and liabilities:   
Tenant and other receivables, net5,485
 613
Prepaid assets(70,949) (58,998)
Other assets(27,065) (64,200)
Accounts payable and accrued expenses27,609
 4,793
Other liabilities(15,911) (14,274)
Net cash provided by operating activities661,625
 572,414
    
Cash Flows from Investing Activities:   
Distributions of capital from partially owned entities347,776
 102,836
Development costs and construction in progress(274,716) (426,641)
Additions to real estate(207,759) (261,971)
Repayment of JBG SMITH Properties loan receivable115,630
 —
Investments in partially owned entities(33,578) (112,797)
Acquisitions of real estate and other(11,841) (91,100)
Proceeds from sales of real estate and related investments9,543
 167,673
Proceeds from repayments of mortgage loans receivable650
 33
Net deconsolidation of 7 West 34th Street—
 (48,000)
Investments in loans receivable and other—
 (11,700)
Purchases of marketable securities—
 (4,379)
Net cash used in investing activities(54,295) (686,046)


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



(Amounts in thousands)For the Three Months Ended March 31,
20232022
Cash Flows from Financing Activities:
Repayments of borrowings$(110,400)$(5,400)
Dividends paid on common shares(71,950)(101,616)
Dividends paid on preferred shares(15,529)(15,529)
Distributions to noncontrolling interests(6,412)(43,545)
Deferred financing costs(2,798)— 
Contributions from noncontrolling interests2,129 481 
Proceeds received from exercise of employee share options and other146 219 
Repurchase of shares related to stock compensation agreements and related tax withholdings and other(30)(85)
Net cash used in financing activities(204,844)(165,475)
Net increase (decrease) in cash and cash equivalents and restricted cash12,682 (789,096)
Cash and cash equivalents and restricted cash at beginning of period1,021,157 1,930,351 
Cash and cash equivalents and restricted cash at end of period$1,033,839 $1,141,255 
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period$889,689 $1,760,225 
Restricted cash at beginning of period131,468 170,126 
Cash and cash equivalents and restricted cash at beginning of period$1,021,157 $1,930,351 
Cash and cash equivalents at end of period$890,957 $973,858 
Restricted cash at end of period142,882 167,397 
Cash and cash equivalents and restricted cash at end of period$1,033,839 $1,141,255 
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest (excluding capitalized interest) and interest rate cap premiums$85,429 $46,868 
Cash payments for income taxes$2,175 $2,159 
Non-Cash Information:
Change in fair value of consolidated interest rate swaps and other$(81,536)$65,239 
Accrued capital expenditures included in accounts payable and accrued expenses70,132 86,667 
Redeemable Class A unit measurement adjustment(23,843)(46,651)
Write-off of fully depreciated assets(17,776)(23,735)
Additional estimated lease liability arising from the recognition of right-of-use asset— 350,000 
Reclassification of condominium units from "development costs and construction in progress" to
   "220 Central Park South condominium units ready for sale"
— 3,024 
See notes to consolidated financial statements (unaudited).
12
(Amounts in thousands)For the Nine Months Ended
September 30,
 2017 2016
Cash Flows from Financing Activities:   
Cash and cash equivalents and restricted cash included in the spin-off of JBG SMITH Properties ($275,000 plus The Bartlett financing proceeds less transaction costs and other mortgage items)$(416,237) $—
Dividends paid on common shares(382,552) (356,863)
Proceeds from borrowings229,042
 2,000,604
Repayments of borrowings(177,109) (1,591,554)
Dividends paid on preferred shares(48,386) (64,006)
Distributions to noncontrolling interests(48,329) (95,055)
Proceeds received from exercise of employee share options25,011
 7,020
Debt issuance and other costs(2,944) (30,846)
Contributions from noncontrolling interests1,044
 11,900
Repurchase of shares related to stock compensation agreements and related tax withholdings and other(418) (186)
Redemption of preferred shares—
 (246,250)
Net cash used in financing activities(820,878) (365,236)
Net decrease in cash and cash equivalents and restricted cash(213,548) (478,868)
Cash and cash equivalents and restricted cash at beginning of period1,599,331
 1,943,515
Cash and cash equivalents and restricted cash at end of period$1,385,783
 $1,464,647
    
Reconciliation of Cash and Cash Equivalents and Restricted Cash:   
Cash and cash equivalents at beginning of period$1,501,027
 $1,835,707
Restricted cash at beginning of period95,032
 99,943
Restricted cash included in discontinued operations at beginning of period3,272
 7,865
Cash and cash equivalents and restricted cash at beginning of period$1,599,331
 $1,943,515
    
Cash and cash equivalents at end of period$1,282,230
 $1,352,697
Restricted cash at end of period103,553
 108,976
Restricted cash included in discontinued operations at end of period—
 2,974
Cash and cash equivalents and restricted cash at end of period$1,385,783
 $1,464,647
    
Supplemental Disclosure of Cash Flow Information:   
Cash payments for interest, excluding capitalized interest of $31,243 and $21,297$257,173
 $275,979
Cash payments for income taxes$5,292
 $7,602
    
Non-Cash Investing and Financing Activities:   
Non-cash distribution to JBG SMITH Properties:   
Assets$3,432,738
 $—
Liabilities(1,414,186) —
Equity(2,018,552) —
Adjustments to carry redeemable Class A units at redemption value286,928
 (30,260)
Loan receivable established upon the spin-off of JBG SMITH Properties115,630
 —
Accrued capital expenditures included in accounts payable and accrued expenses69,033
 129,704
Write-off of fully depreciated assets(41,458) (283,496)
(Reduction) increase in unrealized net gain on available-for-sale securities(10,559) 42,798
Decrease in assets and liabilities resulting from the deconsolidation of investments that were previously consolidated:   
Real estate, net—
 (122,047)
Mortgage payable, net—
 (290,418)


VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)



(Amounts in thousands, except unit amounts)As of
March 31, 2023December 31, 2022
ASSETS
Real estate, at cost:
Land$2,451,828 $2,451,828 
Buildings and improvements9,838,757 9,804,204 
Development costs and construction in progress1,058,518 933,334 
Leasehold improvements and equipment125,982 125,389 
Total13,475,085 13,314,755 
Less accumulated depreciation and amortization(3,546,942)(3,470,991)
Real estate, net9,928,143 9,843,764 
Right-of-use assets685,152 684,380 
Cash and cash equivalents890,957 889,689 
Restricted cash142,882 131,468 
Investments in U.S. Treasury bills276,645 471,962 
Tenant and other receivables95,034 81,170 
Investments in partially owned entities2,633,558 2,665,073 
220 Central Park South condominium units ready for sale37,644 43,599 
Receivable arising from the straight-lining of rents691,271 694,972 
Deferred leasing costs, net of accumulated amortization of $239,454 and $237,395366,960 373,555 
Identified intangible assets, net of accumulated amortization of $100,616 and $98,139137,161 139,638 
Other assets387,011 474,105 
$16,272,418 $16,493,375 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net$5,717,338 $5,829,018 
Senior unsecured notes, net1,192,342 1,191,832 
Unsecured term loan, net793,517 793,193 
Unsecured revolving credit facilities575,000 575,000 
Lease liabilities740,301 735,969 
Accounts payable and accrued expenses441,741 450,881 
Deferred revenue37,879 39,882 
Deferred compensation plan98,996 96,322 
Other liabilities312,107 268,166 
Total liabilities9,909,221 9,980,263 
Commitments and contingencies
Redeemable noncontrolling interests:
Class A units - 14,817,410 and 14,416,891 units outstanding348,208 345,157 
Series D cumulative redeemable preferred units - 141,400 units outstanding3,535 3,535 
Total redeemable noncontrolling partnership units351,743 348,692 
Redeemable noncontrolling interest in a consolidated subsidiary78,796 88,040 
Total redeemable noncontrolling interests430,539 436,732 
Partners' equity:
Partners' capital9,557,462 9,559,341 
Earnings less than distributions(3,961,392)(3,894,580)
Accumulated other comprehensive income95,562 174,967 
Total partners' equity5,691,632 5,839,728 
Noncontrolling interests in consolidated subsidiaries241,026 236,652 
Total equity5,932,658 6,076,380 
$16,272,418 $16,493,375 
See notes to consolidated financial statements (unaudited).
13
(Amounts in thousands, except unit amounts)September 30, 2017 December 31, 2016
ASSETS   
Real estate, at cost:   
Land$3,124,971
 $3,130,825
Buildings and improvements9,824,618
 9,684,144
Development costs and construction in progress1,536,290
 1,278,941
Leasehold improvements and equipment96,820
 93,910
Total14,582,699
 14,187,820
Less accumulated depreciation and amortization(2,805,160) (2,581,514)
Real estate, net11,777,539
 11,606,306
Cash and cash equivalents1,282,230
 1,501,027
Restricted cash103,553
 95,032
Marketable securities193,145
 203,704
Tenant and other receivables, net of allowance for doubtful accounts of $5,539 and $6,70854,769
 61,069
Investments in partially owned entities1,064,982
 1,378,254
Real estate fund investments351,750
 462,132
Receivable arising from the straight-lining of rents, net of allowance of $1,215 and $2,227917,827
 885,167
Deferred leasing costs, net of accumulated amortization of $186,041 and $170,952354,573
 354,997
Identified intangible assets, net of accumulated amortization $144,683 and $194,422166,198
 189,668
Assets related to discontinued operations1,774
 3,568,613
Other assets573,780
 508,878
 $16,842,120
 $20,814,847
LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND EQUITY   
Mortgages payable, net$8,131,606
 $8,113,248
Senior unsecured notes, net846,641
 845,577
Unsecured term loan, net373,354
 372,215
Unsecured revolving credit facilities—
 115,630
Accounts payable and accrued expenses412,100
 397,134
Deferred revenue240,377
 276,276
Deferred compensation plan106,244
 121,183
Liabilities related to discontinued operations3,602
 1,259,443
Other liabilities469,919
 417,199
Total liabilities10,583,843
 11,917,905
Commitments and contingencies
 
Redeemable partnership units:   
Class A units - 12,555,623 and 12,197,162 units outstanding965,276
 1,273,018
Series D cumulative redeemable preferred units - 177,101 units outstanding5,428
 5,428
Total redeemable partnership units970,704
 1,278,446
Equity:   
Partners' capital8,547,405
 8,198,929
Earnings less than distributions(4,098,127) (1,419,382)
Accumulated other comprehensive income121,801
 118,972
Total Vornado Realty L.P. equity4,571,079
 6,898,519
Noncontrolling interests in consolidated subsidiaries716,494
 719,977
Total equity5,287,573
 7,618,496
 $16,842,120
 $20,814,847

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(Amounts in thousands, except per unit amounts)For the Three Months Ended March 31,
20232022
REVENUES:
Rental revenues$396,793 $397,283 
Fee and other income49,130 44,847 
Total revenues445,923 442,130 
EXPENSES:
Operating(228,773)(216,529)
Depreciation and amortization(106,565)(117,443)
General and administrative(41,595)(41,216)
(Expense) benefit from deferred compensation plan liability(3,728)1,944 
Transaction related costs and other(658)(1,005)
Total expenses(381,319)(374,249)
Income from partially owned entities16,666 33,714 
(Loss) income from real estate fund investments(19)5,674 
Interest and other investment income, net9,603 1,018 
Income (loss) from deferred compensation plan assets3,728 (1,944)
Interest and debt expense(86,237)(52,109)
Net gains on disposition of wholly owned and partially owned assets7,520 6,552 
Income before income taxes15,865 60,786 
Income tax expense(4,667)(7,411)
Net income11,198 53,375 
Less net loss (income) attributable to noncontrolling interests in consolidated subsidiaries9,928 (9,374)
Net income attributable to Vornado Realty L.P.21,126 44,001 
Preferred unit distributions(15,558)(15,558)
NET INCOME attributable to Class A unitholders$5,568 $28,443 
INCOME PER CLASS A UNIT - BASIC:
Net income per Class A unit$0.03 $0.14 
Weighted average units outstanding205,802 205,141 
INCOME PER CLASS A UNIT - DILUTED:
Net income per Class A unit$0.03 $0.14 
Weighted average units outstanding205,814 205,896 
See notes to consolidated financial statements (unaudited).
14
(Amounts in thousands, except per unit amounts)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
REVENUES:       
Property rentals$432,062
 $411,153
 $1,275,597
 $1,238,903
Tenant expense reimbursements63,401
 60,957
 174,091
 162,831
Fee and other income33,292
 30,643
 98,212
 88,034
Total revenues528,755
 502,753
 1,547,900
 1,489,768
EXPENSES:       
Operating225,226
 213,762
 661,585
 626,546
Depreciation and amortization104,972
 105,877
 315,223
 316,383
General and administrative36,261
 33,584
 122,161
 112,593
Acquisition and transaction related costs61
 1,069
 1,073
 6,697
Total expenses366,520
 354,292
 1,100,042
 1,062,219
Operating income162,235
 148,461
 447,858
 427,549
(Loss) income from partially owned entities(41,801) 3,811
 5,578
 3,892
(Loss) income from real estate fund investments(6,308) 1,077
 (1,649) 28,750
Interest and other investment income, net9,306
 6,459
 27,800
 20,121
Interest and debt expense(85,068) (79,721) (252,581) (250,034)
Net gains on disposition of wholly owned and partially owned assets—
 —
 501
 160,225
Income before income taxes38,364
 80,087
 227,507
 390,503
Income tax expense(1,188) (4,563) (2,429) (8,921)
Income from continuing operations37,176
 75,524
 225,078
 381,582
(Loss) income from discontinued operations(47,930) 25,080
 (14,501) (104,204)
Net (loss) income(10,754) 100,604
 210,577
 277,378
Less net income attributable to noncontrolling interests in consolidated subsidiaries(4,022) (3,658) (18,436) (26,361)
Net (loss) income attributable to Vornado Realty L.P.(14,776) 96,946
 192,141
 251,017
Preferred unit distributions(16,176) (19,096) (48,531) (59,920)
Preferred unit issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
NET (LOSS) INCOME attributable to Class A unitholders$(30,952) $70,442
 $143,610
 $183,689
        
(LOSS) INCOME PER CLASS A UNIT – BASIC:       
Income from continuing operations, net$0.08
 $0.22
 $0.77
 $1.43
(Loss) income from discontinued operations, net(0.24) 0.13
 (0.07) (0.52)
Net (loss) income per Class A unit$(0.16) $0.35
 $0.70
 $0.91
Weighted average units outstanding201,300
 200,458
 201,093
 200,300
        
(LOSS) INCOME PER CLASS A UNIT – DILUTED:       
Income from continuing operations, net$0.08
 $0.22
 $0.76
 $1.42
(Loss) income from discontinued operations, net(0.24) 0.13
 (0.07) (0.52)
Net (loss) income per Class A unit$(0.16) $0.35
 $0.69
 $0.90
Weighted average units outstanding203,113
 202,141
 203,311
 201,932
        
DISTRIBUTIONS PER CLASS A UNIT$0.60
 $0.63
 $2.02
 $1.89

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Net income$11,198 $53,375 
Other comprehensive (loss) income:
Change in fair value of consolidated interest rate swaps and other(81,536)65,239 
Other comprehensive (loss) income of nonconsolidated subsidiaries(3,329)9,205 
Comprehensive (loss) income(73,667)127,819 
Less comprehensive loss (income) attributable to noncontrolling interests in consolidated subsidiaries10,187 (9,374)
Comprehensive (loss) income attributable to Vornado Realty L.P.$(63,480)$118,445 

See notes to consolidated financial statements (unaudited).
15
(Amounts in thousands)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Net (loss) income$(10,754) $100,604
 $210,577
 $277,378
Other comprehensive income (loss):       
Increase (reduction) in unrealized net gain on available-for-sale securities5,656
 3,685
 (10,559) 42,798
Pro rata share of amounts reclassified from accumulated other comprehensive income of a nonconsolidated subsidiary(646) —
 8,622
 —
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries(626) (915) (1,657) (1,537)
Increase (reduction) in value of interest rate swaps and other1,973
 7,689
 6,611
 (3,482)
Comprehensive (loss) income(4,397) 111,063
 213,594
 315,157
Less comprehensive income attributable to noncontrolling interests in consolidated subsidiaries(4,022) (3,658) (18,436) (26,361)
Comprehensive (loss) income attributable to Vornado L.P.$(8,419) $107,405
 $195,158
 $288,796

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

(Amounts in thousands, except per unit amounts)Accumulated
Other
Comprehensive
Income		Non-controlling Interests in Consolidated Subsidiaries
Preferred UnitsClass A Units
Owned by Vornado		Earnings
Less Than
Distributions		Total Equity
UnitsAmountUnitsAmount
For the Three Months Ended
March 31, 2023:
Balance as of December 31, 202248,793 $1,182,459 191,867 $8,376,882 $(3,894,580)$174,967 $236,652 $6,076,380 
Net income attributable to Vornado Realty L.P.— — — — 21,126 — — 21,126 
Net income attributable to redeemable partnership units— — — — (429)— — (429)
Net loss attributable to nonredeemable noncontrolling interests in consolidated subsidiaries— — — — — — (684)(684)
Distributions to Vornado
($0.375 per unit)
— — — — (71,950)— — (71,950)
Distributions to preferred unitholders (see Note 11 for distributions per unit amounts)— — — — (15,529)— — (15,529)
Class A units issued to Vornado:
Upon redemption of redeemable Class A units, at redemption value— — 9 187 — — — 187 
Under Vornado's dividend reinvestment plan— — 6 146 — — — 146 
Contributions— — — — — — 6,128 6,128 
Distributions— — — — — — (811)(811)
Deferred compensation units and options— — (1)84 (30)— — 54 
Other comprehensive loss of nonconsolidated subsidiaries— — — — — (3,329)— (3,329)
Change in fair value of consolidated interest rate swaps and other— — — — — (81,536)— (81,536)
Unearned 2020 Out-Performance Plan and 2019 Performance AO LTIP awards— — — 20,668 — — — 20,668 
Redeemable Class A unit measurement adjustment— — — (22,964)— (879)— (23,843)
Noncontrolling interests' share of other comprehensive loss— — — — — 6,339 (259)6,080 
Balance as of March 31, 202348,793 $1,182,459 191,881 $8,375,003 $(3,961,392)$95,562 $241,026 $5,932,658 
See notes to consolidated financial statements (unaudited).
16
(Amounts in thousands)                
  Preferred Units 
Class A Units
Owned by Vornado
 
Earnings
Less Than
Distributions
 
Accumulated
Other
Comprehensive
Income
 
Non-
controlling
Interests in
Consolidated
Subsidiaries
 Total Equity
  Units Amount Units Amount    
Balance, December 31, 2016 42,825
 $1,038,055
 189,101
 $7,160,874
 $(1,419,382) $118,972
 $719,977
 $7,618,496
Net income attributable to Vornado Realty L.P. —
 —
 —
 —
 192,141
 —
 —
 192,141
Net income attributable to redeemable partnership units —
 —
 —
 —
 (9,057) —
 —
 (9,057)
Net income attributable to noncontrolling interests in consolidated subsidiaries —
 —
 —
 —
 —
 —
 18,436
 18,436
Distributions to Vornado —
 —
 —
 —
 (382,552) —
 —
 (382,552)
Distributions to preferred unitholders —
 —
 —
 —
 (48,386) —
 —
 (48,386)
Class A Units issued to Vornado:                
Upon redemption of redeemable Class A units, at redemption value —
 —
 349
 34,564
 —
 —
 —
 34,564
Under Vornado's employees' share option plan —
 —
 409
 23,892
 —
 —
 —
 23,892
Under Vornado's dividend reinvestment plan —
 —
 12
 1,119
 —
 —
 —
 1,119
Contributions —
 —
 —
 —
 —
 —
 1,044
 1,044
Distributions:                
JBG SMITH Properties —
 —
 —
 —
 (2,430,427) —
 —
 (2,430,427)
Real estate fund investments —
 —
 —
 —
 —
 —
 (20,851) (20,851)
Other —
 —
 —
 —
 —
 —
 (1,815) (1,815)
Conversion of Series A preferred units to Class A units (2) (44) 2
 44
 —
 —
 —
 —
Deferred compensation units and options —
 —
 1
 1,975
 (418) —
 —
 1,557
Reduction in unrealized net gain on available-for-sale securities —
 —
 —
 —
 —
 (10,559) —
 (10,559)
Pro rata share of amounts reclassified related to a nonconsolidated subsidiary —
 —
 —
 —
 —
 8,622
 —
 8,622
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries —
 —
 —
 —
 —
 (1,657) —
 (1,657)
Increase in value of interest rate swaps —
 —
 —
 —
 —
 6,611
 —
 6,611
Adjustments to carry redeemable Class A units at redemption value —
 —
 —
 286,928
 —
 —
 —
 286,928
Redeemable partnership units' share of above adjustments —
 —
 —
 —
 —
 (188) —
 (188)
Other —
 —
 4
 (2) (46) —
 (297) (345)
Balance, September 30, 2017 42,823
 $1,038,011
 189,878
 $7,509,394
 $(4,098,127) $121,801
 $716,494
 $5,287,573


VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)



(Amounts in thousands, except per unit amounts)Accumulated
Other
Comprehensive
(Loss) Income		Non-controlling Interests in Consolidated Subsidiaries
Preferred UnitsClass A Units
Owned by Vornado		Earnings
Less Than
Distributions		Total Equity
UnitsAmountUnitsAmount
For the Three Months Ended
March 31, 2022:
Balance as of December 31, 202148,793 $1,182,459 191,724 $8,150,741 $(3,079,320)$(17,534)$278,892 $6,515,238 
Net income attributable to Vornado Realty L.P.— — — — 44,001 — — 44,001 
Net income attributable to redeemable partnership units— — — — (1,994)— — (1,994)
Net income attributable to nonredeemable noncontrolling interests in consolidated subsidiaries— — — — — — 9,679 9,679 
Distributions to Vornado
($0.53 per unit)
— — — — (101,616)— — (101,616)
Distributions to preferred unitholders (see Note 11 for distributions per unit amounts)— — — — (15,529)— — (15,529)
Class A units issued to Vornado:
Upon redemption of redeemable Class A units, at redemption value— — 16 717 — — — 717 
Under Vornado's employees' share option plan— — — 7 — — — 7 
Under Vornado's dividend reinvestment plan— — 5 212 — — — 212 
Contributions— — — — — — 481 481 
Distributions— — — — — — (35,961)(35,961)
Deferred compensation units and options— — (2)146 (85)— — 61 
Other comprehensive income of nonconsolidated subsidiaries— — — — — 9,205 — 9,205 
Change in fair value of consolidated interest rate swaps and other— — — — — 65,239 — 65,239 
Redeemable Class A unit measurement adjustment— — — (46,651)— — — (46,651)
Noncontrolling interests' share of other comprehensive income— — — — — (5,134)— (5,134)
Other— — — — (6)— 21 15 
Balance as of March 31, 202248,793 $1,182,459 191,743 $8,105,172 $(3,154,549)$51,776 $253,112 $6,437,970 
See notes to consolidated financial statements (unaudited).
17
(Amounts in thousands)                
  Preferred Units 
Class A Units
Owned by Vornado
 
Earnings
Less Than
Distributions
 
Accumulated
Other
Comprehensive
Income
 
Non-
controlling
Interests in
Consolidated
Subsidiaries
 
Total
Equity
  Units Amount Units Amount    
Balance, December 31, 2015 52,677
 $1,276,954
 188,577
 $7,140,500
 $(1,766,780) $46,921
 $778,483
 $7,476,078
Net income attributable to Vornado Realty L.P. —
 —
 —
 —
 251,017
 —
 —
 251,017
Net income attributable to redeemable partnership units —
 —
 —
 —
 (11,410) —
 —
 (11,410)
Net income attributable to noncontrolling interests in consolidated subsidiaries —
 —
 —
 —
 —
 —
 26,361
 26,361
Distributions to Vornado —
 —
 —
 —
 (356,863) —
 —
 (356,863)
Distributions to preferred unitholders —
 —
 —
 —
 (59,774) —
 —
 (59,774)
Redemption of Series J preferred units (9,850) (238,842) —
 —
 (7,408) —
 —
 (246,250)
Class A Units issued to Vornado:                
Upon redemption of redeemable Class A units, at redemption value —
 —
 293
 28,126
 —
 —
 —
 28,126
Under Vornado's employees' share option plan —
 —
 106
 5,940
 —
 —
 —
 5,940
Under Vornado's dividend reinvestment plan —
 —
 12
 1,080
 —
 —
 —
 1,080
Contributions —
 —
 —
 —
 —
 —
 19,699
 19,699
Distributions:                
Real estate fund investments —
 —
 —
 —
 —
 —
 (59,843) (59,843)
Other —
 —
 —
 —
 —
 —
 (11,631) (11,631)
Deferred compensation units and options —
 —
 7
 1,371
 (186) —
 —
 1,185
Increase in unrealized net gain on available-for-sale securities —
 —
 —
 —
 —
 42,798
 —
 42,798
Pro rata share of other comprehensive loss of nonconsolidated subsidiaries —
 —
 —
 —
 —
 (1,537) —
 (1,537)
Reduction in value of interest rate swaps —
 —
 —
 —
 —
 (3,482) —
 (3,482)
Adjustments to carry redeemable Class A units at redemption value —
 —
 —
 (30,260) —
 —
 —
 (30,260)
Redeemable partnership units' share of above adjustments —
 —
 —
 —
 —
 (2,326) —
 (2,326)
Other —
 (1) (1) —
 (7) —
 86
 78
Balance, September 30, 2016 42,827
 $1,038,111
 188,994
 $7,146,757
 $(1,951,411) $82,374
 $753,155
 $7,068,986

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Cash Flows from Operating Activities:
Net income$11,198 $53,375 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)112,578 122,271 
Distributions of income from partially owned entities38,706 37,778 
Equity in net income of partially owned entities(16,666)(33,714)
Stock-based compensation expense11,714 13,155 
Net gains on disposition of wholly owned and partially owned assets(7,520)(6,552)
Straight-lining of rents3,821 (21,335)
Change in deferred tax liability2,591 3,173 
Amortization of below-market leases, net(1,367)(917)
Net realized and unrealized income on real estate fund investments— (5,672)
Other non-cash adjustments2,072 2,035 
Changes in operating assets and liabilities:
Tenant and other receivables(13,862)(3,499)
Prepaid assets(72,347)29,451 
Other assets(6,746)(9,807)
Accounts payable and accrued expenses(1,411)(7,421)
Other liabilities29,111 (1,307)
Net cash provided by operating activities91,872 171,014 
Cash Flows from Investing Activities:
Proceeds from maturities of U.S. Treasury bills197,294 — 
Development costs and construction in progress(135,550)(209,738)
Proceeds from repayment of participation in 150 West 34th Street mortgage loan105,000 — 
Additions to real estate(57,032)(30,900)
Proceeds from sale of condominium units at 220 Central Park South14,216 15,095 
Distributions of capital from partially owned entities11,559 — 
Investments in partially owned entities(8,833)(4,571)
Acquisitions of real estate and other(1,000)— 
Purchase of U.S. Treasury bills— (645,920)
Proceeds from sales of real estate— 81,399 
Net cash provided by (used in) investing activities125,654 (794,635)
See notes to consolidated financial statements (unaudited).
18
(Amounts in thousands)For the Nine Months Ended
September 30,
 2017 2016
Cash Flows from Operating Activities:   
Net income$210,577
 $277,378
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization (including amortization of deferred financing costs)407,539
 446,040
Return of capital from real estate fund investments80,294
 71,888
Distributions of income from partially owned entities65,097
 56,853
Other non-cash adjustments43,921
 33,971
Straight-lining of rents(37,752) (118,798)
Amortization of below-market leases, net(35,446) (41,676)
Net realized and unrealized losses (gains) on real estate fund investments18,537
 (16,513)
Equity in net income of partially owned entities(6,013) (529)
Net gains on sale of real estate and other(3,797) (5,074)
Net gains on disposition of wholly owned and partially owned assets(501) (160,225)
Real estate impairment losses—
 161,165
Changes in operating assets and liabilities:   
Tenant and other receivables, net5,485
 613
Prepaid assets(70,949) (58,998)
Other assets(27,065) (64,200)
Accounts payable and accrued expenses27,609
 4,793
Other liabilities(15,911) (14,274)
Net cash provided by operating activities661,625
 572,414
    
Cash Flows from Investing Activities:   
Distributions of capital from partially owned entities347,776
 102,836
Development costs and construction in progress(274,716) (426,641)
Additions to real estate(207,759) (261,971)
Repayment of JBG SMITH Properties loan receivable115,630
 —
Investments in partially owned entities(33,578) (112,797)
Acquisitions of real estate and other(11,841) (91,100)
Proceeds from sales of real estate and related investments9,543
 167,673
Proceeds from repayments of mortgage loans receivable650
 33
Net deconsolidation of 7 West 34th Street—
 (48,000)
Investments in loans receivable and other—
 (11,700)
Purchases of marketable securities—
 (4,379)
Net cash used in investing activities(54,295) (686,046)


VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Cash Flows from Financing Activities:
Repayments of borrowings$(110,400)$(5,400)
Distributions to Vornado(71,950)(101,616)
Distributions to preferred unitholders(15,529)(15,529)
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries(6,412)(43,545)
Deferred financing costs(2,798)— 
Contributions from noncontrolling interests in consolidated subsidiaries2,129 481 
Proceeds received from exercise of Vornado stock options and other146 219 
Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other(30)(85)
Net cash used in financing activities(204,844)(165,475)
Net increase (decrease) in cash and cash equivalents and restricted cash12,682 (789,096)
Cash and cash equivalents and restricted cash at beginning of period1,021,157 1,930,351 
Cash and cash equivalents and restricted cash at end of period$1,033,839 $1,141,255 
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period$889,689 $1,760,225 
Restricted cash at beginning of period131,468 170,126 
Cash and cash equivalents and restricted cash at beginning of period$1,021,157 $1,930,351 
Cash and cash equivalents at end of period$890,957 $973,858 
Restricted cash at end of period142,882 167,397 
Cash and cash equivalents and restricted cash at end of period$1,033,839 $1,141,255 
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest (excluding capitalized interest) and interest rate cap premiums$85,429 $46,868 
Cash payments for income taxes$2,175 $2,159 
Non-Cash Information:
Change in fair value of consolidated interest rate swaps and other$(81,536)$65,239 
Accrued capital expenditures included in accounts payable and accrued expenses70,132 86,667 
Redeemable Class A unit measurement adjustment(23,843)(46,651)
Write-off of fully depreciated assets(17,776)(23,735)
Additional estimated lease liability arising from the recognition of right-of-use asset— 350,000 
Reclassification of condominium units from "development costs and construction in progress" to
   "220 Central Park South condominium units ready for sale"
— 3,024 
See notes to consolidated financial statements (unaudited)

19
(Amounts in thousands)For the Nine Months Ended
September 30,
 2017 2016
Cash Flows from Financing Activities:   
Cash and cash equivalents and restricted cash included in the spin-off of JBG SMITH Properties ($275,000 plus The Bartlett financing proceeds less transaction costs and other mortgage items)$(416,237) $—
Distributions to Vornado(382,552) (356,863)
Proceeds from borrowings229,042
 2,000,604
Repayments of borrowings(177,109) (1,591,554)
Distributions to preferred unitholders(48,386) (64,006)
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries(48,329) (95,055)
Proceeds received from exercise of Vornado stock options25,011
 7,020
Debt issuance and other costs(2,944) (30,846)
Contributions from noncontrolling interests in consolidated subsidiaries1,044
 11,900
Repurchase of Class A units related to stock compensation agreements and related tax withholdings and other(418) (186)
Redemption of preferred units—
 (246,250)
Net cash used in financing activities(820,878) (365,236)
Net decrease in cash and cash equivalents and restricted cash(213,548) (478,868)
Cash and cash equivalents and restricted cash at beginning of period1,599,331
 1,943,515
Cash and cash equivalents and restricted cash at end of period$1,385,783
 $1,464,647
    
Reconciliation of Cash and Cash Equivalents and Restricted Cash:   
Cash and cash equivalents at beginning of period$1,501,027
 $1,835,707
Restricted cash at beginning of period95,032
 99,943
Restricted cash included in discontinued operations at beginning of period3,272
 7,865
Cash and cash equivalents and restricted cash at beginning of period$1,599,331
 $1,943,515
    
Cash and cash equivalents at end of period$1,282,230
 $1,352,697
Restricted cash at end of period103,553
 108,976
Restricted cash included in discontinued operations at end of period—
 2,974
Cash and cash equivalents and restricted cash at end of period$1,385,783
 $1,464,647
    
Supplemental Disclosure of Cash Flow Information:   
Cash payments for interest, excluding capitalized interest of $31,243 and $21,297$257,173
 $275,979
Cash payments for income taxes$5,292
 $7,602
    
Non-Cash Investing and Financing Activities:   
Non-cash distribution to JBG SMITH Properties:   
Assets$3,432,738
 $—
Liabilities(1,414,186) —
Equity(2,018,552) —
Adjustments to carry redeemable Class A units at redemption value286,928
 (30,260)
Loan receivable established upon the spin-off of JBG SMITH Properties115,630
 —
Accrued capital expenditures included in accounts payable and accrued expenses69,033
 129,704
Write-off of fully depreciated assets(41,458) (283,496)
(Reduction) increase in unrealized net gain on available-for-sale securities(10,559) 42,798
Decrease in assets and liabilities resulting from the deconsolidation of investments that were previously consolidated:   
Real estate, net—
 (122,047)
Mortgage payable, net—
 (290,418)


VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)




1.
1.    Organization

Vornado Realty Trust (“Vornado”) is a fully integratedfully-integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P. (the “Operating Partnership”), a Delaware limited partnership (the “Operating Partnership”).partnership. Vornado is the sole general partner of and owned approximately 93.5%91.4% of the common limited partnership interest in the Operating Partnership as of September 30, 2017.March 31, 2023. All references to the “Company,” “we,” “us,”“us” and “our” mean, collectively, Vornado, the Operating Partnership and those entities/subsidiaries consolidated by Vornado.

2.
2.    Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Vornado and the Operating Partnership and their consolidated subsidiaries. All inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K as amended, for the year ended December 31, 2016,2022, as filed with the SEC.

As a result of the spin-off of our Washington, DC segment, effective July 1, 2017, the historical results of our Washington, DC segment are reflected in our consolidated financial statements as discontinued operations for all periods presented.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 2017March 31, 2023 are not necessarily indicative of the operating results for the full year. In addition, certain prior year balances have been reclassified in order to conform to the current period presentation.


3.    Recently Issued Accounting Literature
In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04 establishing Accounting Standards Codification ("ASC") Topic 848, Reference Rate Reform, and in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):Scope (collectively, "ASC 848").ASC 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of ASC 848 to December 31, 2024. ASU 2022-06 is effective immediately for all companies. We continue to evaluate the impact of ASC 848 and may apply other elections as applicable as additional changes in the market occur.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

3.
Recently Issued Accounting Literature

4.    Revenue Recognition
In May 2014,Below is a summary of our revenues by segment. Additional financial information related to these reportable segments for the Financial Accounting Standards Board (“FASB”) issued an update ("ASU 2014-09") establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to usethree months ended March 31, 2023 and 2022 is set forth in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. We will adopt this standard effective January 1, 2018, with the exception of theNote 19 - Segment Information.
(Amounts in thousands)For the Three Months Ended March 31, 2023
TotalNew YorkOther
Property rentals$376,829 $307,722 $69,107 
Trade shows5,048 — 5,048 
Lease revenues(1)
381,877 307,722 74,155 
Tenant services9,769 7,582 2,187 
Parking revenues5,147 4,212 935 
Rental revenues396,793 319,516 77,277 
BMS cleaning fees35,328 37,678 (2,350)(2)
Management and leasing fees3,049 3,173 (124)
Other income10,753 3,447 7,306 
Fee and other income49,130 44,298 4,832 
Total revenues$445,923 $363,814 $82,109 
____________________
See notes below.
(Amounts in thousands)For the Three Months Ended March 31, 2022
TotalNew YorkOther
Property rentals$377,887 $307,723 $70,164 
Trade shows5,144 — 5,144 
Lease revenues(1)
383,031 307,723 75,308 
Tenant services9,889 7,411 2,478 
Parking revenues4,363 3,711 652 
Rental revenues397,283 318,845 78,438 
BMS cleaning fees32,691 34,711 (2,020)(2)
Management and leasing fees2,769 2,967 (198)
Other income9,387 2,025 7,362 
Fee and other income44,847 39,703 5,144 
Total revenues$442,130 $358,548 $83,582 
____________________
(1)The components of revenue from leases,lease revenues were as follows:
For the Three Months Ended March 31,
20232022
Fixed billings$347,914 $329,251 
Variable billings37,939 32,974 
Total contractual operating lease billings385,853 362,225 
Adjustment for straight-line rents and amortization of acquired below-market leases and other, net(3,976)20,806 
Lease revenues$381,877 $383,031 
(2)Represents the elimination of Building Maintenance Services LLC ("BMS") cleaning fees related to THE MART and 555 California Street which has been deferred until the adoption of the update ASU 2016-02 to ASC Topic 842, Leases, on January 1, 2019. We will utilize the modified retrospective method when adopting ASU 2014-09, which requires a cumulative-effect adjustment to retained earningsare included as of the beginning of the fiscal year of adoption. We have analyzed our revenue streams and identified the areas that we expect to be impacted by the adoption of this standard. We expect this standard will have an impact on the classification of reimbursements of real estate taxes and insurance expenses and certain non-lease components of revenue (e.g., reimbursements of common area maintenance expenses) from leases with no material impact on "total revenues", for new leases executed on or after January 1, 2019. We areincome in the process of completing the evaluation of the overall impact of this standard on our consolidated financial statements, including required informational disclosures for our revenue streams beginning with the first reporting period after adoption.

In January 2016, the FASB issued an update (“ASU 2016-01”) Recognition and Measurement of Financial Assets and Financial Liabilities to ASCTopic 825, Financial Instruments.  ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We will adopt this standard effective January 1, 2018. While the adoption of this standard requires us to continue to measure “marketable securities” at fair value at each reporting date, the changes in fair value will be recognized in current period earnings as opposed to “other comprehensive income (loss).”

In February 2016, the FASB issued an update ASU 2016-02 establishing ASC Topic 842, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. We are currently evaluating the overall impact of the adoption of ASU 2016-02 on our consolidated financial statements and believe that the standard will more significantly impact the accounting for leases in which we are a lessee. We have a number of ground leases for which we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining minimum lease payments upon adoption of this standard. We also expect that this standard will require us to allocate total consideration from leases between lease and non-lease components based on the estimated stand-alone selling prices of the components. The lease components (e.g., base rent) will continue to be recognized on a straight-line basis over the term of the lease and certain non-lease components (e.g., reimbursements of common area maintenance expenses) will be accounted for under the new revenue recognition guidance of ASU 2014-09. As a result, we expect that this standard will have an impact on the classification of reimbursements of real estate taxes, insurance expenses and common area maintenance expenses on our consolidated statements of income, with no impact on "total revenue", for new leases executed on or after January 1, 2019. Under ASU 2016-02, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, we may no longer be able to capitalize internal leasing costs and instead may be required to expense these costs as incurred. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We will adopt this standard effective January 1, 2019 using the modified retrospective approach and will elect to use the practical expedients provided by this standard.

In March 2016, the FASB issued an update (“ASU 2016-09”) Improvements to Employee Share-Based Payment Accounting to ASC Topic 718, Compensation - Stock Compensation (“ASC 718”).  ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 was effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016.  The adoption of this update as of January 1, 2017 did not have a material impact on our consolidated financial statements.

New York segment.

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VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

3.Recently Issued Accounting Literature - continued

5.    Real Estate Fund Investments
In August 2016, the FASB issued an update (“ASU 2016-15”) Classification of Certain Cash Receipts and Cash Payments to ASC Topic 230, Statement of Cash Flows. ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-15 effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. The adoption of ASU 2016-15 impacted our classification of distributions received from equity method investees. We selected the nature of earnings approach for classifying distributions. Under this approach, the distributions from equity method investees are classified on the basis of the nature of the activity of the investee that generated the distribution. The retrospective application of ASU 2016-15 resulted in the reclassification of certain distributions of income from partially owned entities to distributions of capital from partially owned entities, which reduced net cash provided by operating activities and net cash used in investing activities by $1,839,000 for the nine months ended September 30, 2016.

In November 2016, the FASB issued an update (“ASU 2016-18”) Restricted Cash to ASC Topic 230, Statement of Cash Flows. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-18 effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. Accordingly, the consolidated statements of cash flows present a reconciliation of the changes in cash and cash equivalents and restricted cash. Restricted cash primarily consists of security deposits, cash restricted for the purposes of facilitating a Section 1031 Like-Kind Exchange, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

In February 2017, the FASB issued an update (“ASU 2017-05”) Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets to ASC Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 clarifies the scope of recently established guidance on nonfinancial asset derecognition, as well as the accounting for partial sales of nonfinancial assets. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The adoption of this standard on January 1, 2018 is not expected to have an impact on our consolidated financial statements.

In May 2017, the FASB issued an update (“ASU 2017-09”) Scope of Modification Accounting to ASC 718. ASU 2017-09 provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The adoption of this standard on January 1, 2018 is not expected to have an impact on our consolidated financial statements.

In August 2017, the FASB issued an update (“ASU 2017-12”) Targeted Improvements to Accounting for Hedging Activities to ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASU 2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2017-12 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.


21
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

4.Real Estate Fund Investments

We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”) and own a 25.0% interest in the Fund. The Fund had an initial eight-year term ending February 2019, which has an eight-year termbeen extended to December 2023, by which time the Fund intends to dispose of its remaining investments and awind down its business. The Fund's three-year investment period that ended in July 2013. The Fund is accounted for under ASC Topic 946, Financial Services – Investment Companies (“ASC 946”) and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.

We are also the general partner and investment manager of the Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza Joint Venture”) and own a 57.1% interest in the joint venture which, ownsprior to the 24.7%transaction described below, owned the 24.3% interest in the Crowne Plaza Times Square Hotel not owned by the Fund. Through our interests in the Fund and the Crowne Plaza Joint Venture, in total we owned an indirect, minority 32.8% interest in the Crowne Plaza Times Square Hotel. The Crowne Plaza Joint Venture is also accounted for under ASC 946 and we consolidate the accounts of the joint venture into our consolidated financial statements retaining the fair value basis of accounting.

On September 29, 2017, the Fund completed the sale of 800 Corporate Pointe in Culver City, CA for $148,000,000. From the inception of this investment through its disposition, the Fund realized a $35,620,000 net gain.
As of September 30, 2017, we had five real estate fund investments throughIn June 2020, the Fund and the Crowne Plaza Joint Venture (collectively, the "Crowne Plaza Co-Investors") defaulted on the $274,355,000 non-recourse loan on the Crowne Plaza Times Square Hotel. In 2021, the mezzanine lender to the Crowne Plaza Co-Investors exercised its right under the loan documents and appointed an independent director to certain subsidiaries of the Crowne Plaza Co-Investors. Since then, neither we nor the Fund controlled Crowne Plaza Times Square Hotel nor have we or the Fund been involved in making any operating decisions relating to Crowne Plaza Times Square Hotel. In December 2022, the Fund entered into a Restructuring Support Agreement with certain of its subsidiaries and the lender of the loan on the Crowne Plaza Times Square Hotel, pursuant to which the independent director caused the subsidiaries to enter into a Chapter 11 bankruptcy restructuring process and the Fund agreed to work consensually with such subsidiaries and the lender to effectuate a transfer of ownership of the hotel property through a court supervised auction process, or an aggregate fairequitization of the secured loans held by the lender. On March 21, 2023, the bankruptcy court confirmed the subsidiaries' Chapter 11 plan of reorganization, which became effective on March 31, 2023. Following the Chapter 11 reorganization, neither we nor the Fund have any continuing ownership or other interest in the hotel property. As we have no carrying value or contingent liabilities related to Crowne Plaza, there is no impact to our consolidated financial statements for the three months ended March 31, 2023.
As of $351,750,000, or $95,136,000 in excess ofMarch 31, 2023, we had one real estate fund investment carried at zero on our consolidated balance sheet, $28,815,000 below cost, and had remaining unfunded commitments of $117,872,000,$28,465,000, of which our share was $34,502,000. $8,849,000.
Below is a summary of (loss) income from the Fund and the Crowne Plaza Joint Venture forVenture.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Previously recorded unrealized loss on exited investments$247,575 $— 
Realized loss on exited investments(247,575)— 
Net investment (loss) income(19)2 
Net unrealized income on held investments— 5,672 
(Loss) income from real estate fund investments(19)5,674 
Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries239 (3,964)
Income from real estate fund investments net of noncontrolling interests in consolidated subsidiaries$220 $1,710 
The table below summarizes the threechanges in the fair value of the Fund and nine months ended September 30, 2017 and 2016.the Crowne Plaza Joint Venture.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Beginning balance$— $7,730 
Previously recorded unrealized loss on exited investments247,575 — 
Realized loss on exited investments(247,575)— 
Net unrealized income on held investments— 5,672 
Ending balance$— $13,402 
(Amounts in thousands)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Net investment income$6,028
 $5,841
 $16,888
 $12,237
Net realized gains on exited investments35,620
 —
 35,861
 14,676
Previously recorded unrealized gains on exited investment(36,736) —
 (25,538) (14,254)
Net unrealized (loss) gain on held investments(11,220) (4,764) (28,860) 16,091
(Loss) income from real estate fund investments(6,308) 1,077
 (1,649) 28,750
Less income attributable to noncontrolling interests in consolidated subsidiaries(1,486) (270) (9,684) (15,088)
(Loss) income from real estate fund investments attributable to the Operating Partnership (1)
(7,794) 807
 (11,333) 13,662
Less loss (income) attributable to noncontrolling interests in the Operating Partnership485
 (49) 706
 (843)
(Loss) income from real estate fund investments attributable to Vornado$(7,309) $758
 $(10,627) $12,819
____________________
(1)Excludes $744 and $804 of management and leasing fees for the three months ended September 30, 2017 and 2016, respectively, and $3,125 and $2,499 for the nine months ended September 30, 2017 and 2016, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

5.Marketable Securities

Below is a summary of our marketable securities portfolio as of September 30, 2017 and December 31, 2016.
(Amounts in thousands)As of September 30, 2017 As of December 31, 2016
 Fair Value GAAP Cost Unrealized Gain Fair Value GAAP Cost Unrealized Gain
Equity securities:           
Lexington Realty Trust$188,753
 $72,549
 $116,204
 $199,465
 $72,549
 $126,916
Other4,392
 650
 3,742
 4,239
 650
 3,589
 $193,145
 $73,199
 $119,946
 $203,704
 $73,199
 $130,505



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VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

6.6.    Investments in Partially Owned Entities

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

Fifth Avenue and Times Square JV
As of September 30, 2017,March 31, 2023, we own a 51.5% common interest in a joint venture ("Fifth Avenue and Times Square JV") which owns interests in properties located at 640 Fifth Avenue, 655 Fifth Avenue, 666 Fifth Avenue, 689 Fifth Avenue, 697-703 Fifth Avenue, 1535 Broadway and 1540 Broadway (collectively, the "Properties"). The remaining 48.5% common interest in the joint venture is owned by a group of institutional investors (the "Investors"). Our 51.5% common interest in the joint venture represents an effective 51.0% interest in the Properties. The 48.5% common interest in the joint venture owned by the Investors represents an effective 47.2% interest in the Properties. We provide various services to Fifth Avenue and Times Square JV in accordance with management, development, leasing and other agreements.
We also own $1.828 billion aggregate liquidation preference of preferred equity interests in certain of the Properties. The preferred equity has an annual coupon of 4.25% through April 2024, increasing to 4.75% for the subsequent five years and thereafter at a formulaic rate. It can be redeemed under certain conditions on a tax deferred basis.
Fifth Avenue and Times Square JV operates pursuant to a limited partnership agreement (the “Partnership Agreement”) among VRLP, a wholly owned subsidiary of VRLP (“Vornado GP”) and the Investors. Vornado GP is the general partner of Fifth Avenue and Times Square JV. VRLP is jointly and severally liable with Vornado GP for Vornado GP’s obligations under the Partnership Agreement. Pursuant to the Partnership Agreement and the organizational documents of the entities owning the Properties, the Investors or directors of the entities owning the Properties appointed by the Investors, as the case may be, have the right to approve annual business plans and budgets for the Properties and certain other specified major decisions with respect to the Properties and Fifth Avenue and Times Square JV. The Partnership Agreement affords the Investors the right to remove and replace Vornado GP in the event Vornado GP or certain of its affiliates commit fraud or other bad acts in connection with Fifth Avenue and Times Square JV, become bankrupt or insolvent, or default on certain of their respective obligations under the Partnership Agreement (subject to notice and cure periods in certain circumstances). The Partnership Agreement includes (i) remedies for the failure of any partner to make a required capital contribution for necessary expenses and (ii) liquidity provisions, including transfer rights subject to mutual rights of first offer and a mutual buy-sell, customary for similar partnerships. Subject to certain limitations, commencing April 19, 2024, either party may transfer more than 50% or control of their respective interests in Fifth Avenue and Times Square JV or exercise the buy-sell on a Property-by-Property basis. In the event the buy-sell is exercised with respect to any Property in which VRLP holds preferred equity and VRLP is the selling partner in the buy-sell, VRLP may elect whether or not to include its preferred equity in the buy-sell for the Property to be sold.
As of March 31, 2023, the carrying amount of our investment in the joint venture was less than our share of the equity in the net assets of the joint venture by approximately $859,004,000, the basis difference primarily resulting from non-cash impairment losses recognized in prior periods. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Fifth Avenue and Times Square JV’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as a reduction to depreciation expense over their estimated useful lives.
On December 21, 2022, the 697-703 Fifth Avenue $450,000,000 non-recourse mortgage loan matured and was not repaid, at which time the lenders declared an event of default and $29,000,000 of property-level funds were applied by the lenders against the principal balance, resulting in a $421,000,000 loan balance. The loan bears default interest at the Prime Rate plus 1.00% (9.00% as of March 31, 2023). The Fifth Avenue and Times Square JV is in negotiations with the lenders regarding a restructuring but there can be no assurance as to the timing and ultimate resolution of these negotiations.
Alexander's, Inc. ("Alexander's") (NYSE: ALX)
As of March 31, 2023, we own 1,654,068 Alexander’s common shares, representing aor approximately 32.4% interest in Alexander’s. We account for our investment inof Alexander’s under the equity method.common equity. We manage, leasedevelop and developlease Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.

On March 8, 2023, Alexander's entered into an agreement to sell the Rego Park III land parcel, located in Queens, New York, for $71,060,000, inclusive of consideration for Brownfield tax benefits and reimbursement of costs for plans, specifications and improvements to date. Alexander's anticipates the closing of the sale in the second quarter of 2023 and will recognize a financial statement gain of approximately $54,000,000. Upon completion of the sale, we will recognize our approximate $16,000,000 share of the net gain.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
6.    Investments in Partially Owned Entities - continued
Alexander's, Inc. - continued
As of September 30, 2017,March 31, 2023, the market value (“("fair value”value" pursuant to ASC Topic 820, Fair Value Measurements (“ ("ASC 820”820")) of our investment in Alexander’s, based on Alexander’s September 29, 2017 quarter endedMarch 31, 2023 closing share price of $424.09,$193.75, was $701,474,000,$320,476,000, or $575,842,000$237,752,000 in excess of the carrying amount on our consolidated balance sheet.sheets. As of September 30, 2017,March 31, 2023, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceedsexceeded our share of the equity in the net assets of Alexander’s by approximately $39,418,000.$29,758,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The
Below is a schedule summarizing our investments in partially owned entities.
(Amounts in thousands)Percentage Ownership at March 31, 2023Balance as of
March 31, 2023December 31, 2022
Investments:
Fifth Avenue and Times Square JV (see page 23 for details)
51.5%$2,262,393 $2,272,320 
Partially owned office buildings/land(1)
Various177,971 182,180 
Alexander's (see page 23 and above for details)
32.4%82,724 87,796 
Other investments(2)
Various110,470 122,777 
$2,633,558 $2,665,073 
Investments in partially owned entities included in other liabilities(3):
7 West 34th Street53.0%$(65,513)$(65,522)
85 Tenth Avenue49.9%(13,544)(16,006)
$(79,057)$(81,528)
____________________
(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, 512 West 22nd Street, 61 Ninth Avenue and others.
(2)Includes interests in Independence Plaza, Rosslyn Plaza and others.
(3)Our negative basis difference related to the land will be recognized upon dispositionresults from distributions in excess of our investment.


On June 1, 2017, Alexander’s completedBelow is a $500,000,000 refinancingschedule of the office portion of 731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% (2.14% at September 30, 2017) and matures in June 2020 with four one-year extension options. In connection therewith, Alexander’s purchased an interest rate cap with a notional amount of $500,000,000 that caps LIBOR at a rate of 6.00%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.

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

As of September 30, 2017, we own 5,717,184 UE operating partnership units, representing a 4.5% ownership interest in UE. We account for our investment in UE under the equity method and record our share of UE’s net income or loss on a one-quarter lag basis. In 2017 and 2016, we provided UE with information technology support. UE is providing us with leasing and property management services for (i) certain small retail properties that we plan to sell, and (ii) our affiliate, Alexander’s, Rego Park retail assets. As of September 30, 2017, the fair value of our investment in UE, based on UE’s September 29, 2017 quarter ended closing share price of $24.12, was $137,898,000, or $91,356,000 in excess of the carrying amount on our consolidated balance sheet.

During the three and nine months ended September 30, 2017, UE issued approximately 6,250,000 and 20,250,000 operating partnership units related to property acquisitions and public offerings of its common stock. As a result, our ownership interest in UE decreased to 4.5% from 5.4%. In accordance with ASC 323-10-40-1, we account for a unit issuance by an equity method investee as if we had sold a proportionate share of our investment. Accordingly, during the three and nine months ended September 30, 2017, we recorded $5,200,000 and $21,100,000, respectively, of net gains in connection with these issuances which are included in “(loss) income from partially owned entities” on our consolidated statements of income.entities.

(Amounts in thousands)Percentage Ownership at March 31, 2023For the Three Months Ended March 31,
20232022
 Our share of net income (loss):
Fifth Avenue and Times Square JV (see page 23 for details):
Equity in net income51.5%$10,199 $16,309 
Return on preferred equity, net of our share of the expense9,226 9,226 
19,425 25,535 
Alexander's (see page 23 and above for details):
Equity in net income32.4%3,571 4,671 
Management, leasing and development fees1,173 1,020 
4,744 5,691 
Partially owned office buildings(1)
Various(8,963)1,292 
Other investments(2)
Various1,460 1,196 
$16,666 $33,714 
Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)____________________

(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, 7 West 34th Street, 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.
As of September 30, 2017, we own 6,250,000 PREIT operating partnership units, representing an 8.0% interest(2)Includes interests in PREIT. We account for our investment in PREIT under the equity methodIndependence Plaza, Rosslyn Plaza and record our share of PREIT’s net income or loss on a one-quarter lag basis.

Based on PREIT’s September 29, 2017 quarter ended closing share price of $10.49, the market value (“fair value” pursuant to ASC Topic 323, Investments - Equity Method and Joint Ventures) of our investment in PREIT was $65,563,000 or $44,465,000 below the carrying amount on our consolidated balance sheet. We have concluded that our investment in PREIT is “other-than-temporarily” impaired and recorded a $44,465,000 non-cash impairment loss on our consolidated statements of income. Our conclusion was based on a sustained trading value of PREIT stock below our carrying amount and our inability to forecast a recovery in the near-term.

others.

24
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VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

7.    350 Park Avenue

6.Investments in Partially Owned Entities - continued

On January 24, 2023, we and the Rudin family (“Rudin”) completed agreements with Citadel Enterprise Americas LLC (“Citadel”) and with an affiliate of Kenneth C. Griffin, Citadel’s Founder and CEO (“KG”), for a series of transactions relating to 350 Park Avenue and 40 East 52nd Street.
Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI) - continued

As of September 30, 2017, the carrying amount of our investment in PREIT exceeds our share of the equity in the net assets of PREIT by approximately $33,399,000. The majority of this basis difference resulted from the excess of the fair value of the PREIT operating units received over our share of the book value of PREIT’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of PREIT’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference relatedPursuant to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in PREIT’s net loss. The basis difference related to the land will be recognized upon disposition of our investment.

Moynihan Office Building

In September 2016, our 50.1% joint venture with the Related Companies (“Related”) was designated by Empire State Development (“ESD”), an entity of New York State to redevelop the historic Farley Post Office building. The building will includeagreements, Citadel master leases 350 Park Avenue, a new Moynihan Train Hall and approximately 850,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 120,000 square feet of retail space. On June 15, 2017, the joint venture closed a 99-year, triple-net lease with ESD for the commercial space at the Moynihan Office Building and made a $230,000,000 upfront contribution, of which our share is $115,230,000, towards the construction of the train hall. The lease calls for annual rent payments of $5,000,000 plus payments in lieu of real estate taxes. Simultaneously, the joint venture completed a $271,000,000 loan facility, with an initial advance of $202,299,000. The interest-only loan is at LIBOR plus 3.25% (4.48% at September 30, 2017) and matures in June 2019 with two one-year extension options.

The joint venture has also entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bears a full guaranty from Skanska AB.

Mezzanine Loan – New York

On May 9, 2017, a $150,000,000 mezzanine loan owned by a joint venture in which we have a 33.3% ownership interest was repaid at its maturity and we received our $50,000,000 share. The mezzanine loan earned interest at LIBOR plus 9.42%.

Sterling Suffolk Racecourse, LLC (“Suffolk Downs JV”)

On May 26, 2017, Suffolk Downs JV, a joint venture in which we have a 21.2% equity interest, sold the property comprising the Suffolk Downs racetrack in East Boston, Massachusetts (“Suffolk Downs”) for $155,000,000, which resulted in net proceeds and a net gain to us of $15,314,000. In addition, we were repaid $29,318,000 of principal and $6,129,000 of accrued interest on our debt investments in Suffolk Downs JV, resulting in a net gain of $11,373,000.

330 Madison Avenue

On July 19, 2017, the joint venture, in which we have a 25.0% interest, completed a $500,000,000 refinancing of 330 Madison Avenue, an 845,000585,000 square foot Manhattan office building. The seven-year interest-only loan matures in August 2024 and has a fixed ratebuilding, on an “as is” basis for ten years, with an initial annual net rent of 3.43%. Our share of net proceeds, after repayment$36,000,000. Per the terms of the existing $150,000,000 LIBOR plus 1.30% mortgagelease, no tenant allowance or free rent was provided. In the first quarter of 2023, we commenced revenue recognition of the master lease. Citadel will also master lease Rudin’s adjacent property at 40 East 52nd Street (390,000 square feet).
In addition, we have entered into a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40,000,000 and, closing costs, was approximately $85,000,000.

280upon formation of the KG joint venture described below, will combine that property with 350 Park Avenue and 40 East 52nd Street to create a premier development site (collectively, the “Site”). The purchase is expected to close in the second quarter of 2023.

From October 2024 to June 2030, KG will have the option to either:
On August 23, 2017,•acquire a 60% interest in a joint venture with Vornado/Rudin that would value the Site at $1.2 billion ($900,000,000 to Vornado and $300,000,000 to Rudin) and build a new 1,700,000 square foot office tower (the “Project”) pursuant to East Midtown Subdistrict zoning with Vornado/Rudin as developer. KG would own 60% of the joint venture and Vornado/Rudin would own 40% (with Vornado owning 36% and Rudin owning 4% of the joint venture along with a $250,000,000 preferred equity interest in the Vornado/Rudin joint venture).
◦at the joint venture formation, Citadel or its affiliates will execute a pre-negotiated 15-year anchor lease with renewal options for approximately 850,000 square feet (with expansion and contraction rights) at the Project for its primary office in New York City;
◦the rent for Citadel’s space will be determined by a formula based on a percentage return (that adjusts based on the actual cost of capital) on the total Project cost;
◦the master leases will terminate at the scheduled commencement of demolition;
•or, exercise an option to purchase the Site for $1.4 billion ($1.085 billion to Vornado and $315,000,000 to Rudin), in which wecase Vornado/Rudin would not participate in the new development.
Further, Vornado/Rudin will have a 50.0% interest, completed athe option from October 2024 to September 2030 to put the Site to KG for $1.2 billion refinancing of 280 Park Avenue,($900,000,000 to Vornado and $300,000,000 to Rudin). For ten years following any put option closing, unless the put option is exercised in response to KG’s request to form the joint venture or KG makes a 1,250,000 square foot Manhattan office building. The loan is interest-only at LIBOR plus 1.73% (2.97% at September 30, 2017) and matures$200,000,000 termination payment, Vornado/Rudin will have the right to invest in September 2019a joint venture with five one-year extension options. Our share of netKG on the terms described above if KG proceeds after repaymentwith development of the existing $900,000,000 LIBOR plus 2.00% mortgage and closing costs, was approximately $140,000,000.

Site.

25
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VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

6.Investments in Partially Owned Entities - continued

8.    Identified Intangible Assets and Liabilities
Toys "R" Us, Inc. ("Toys")The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily below-market leases).

(Amounts in thousands)Balance as of
March 31, 2023December 31, 2022
Identified intangible assets:
Gross amount$237,777 $237,777 
Accumulated amortization(100,616)(98,139)
Total, net$137,161 $139,638 
Identified intangible liabilities (included in deferred revenue):
Gross amount$244,396 $244,396 
Accumulated amortization(210,450)(208,592)
Total, net$33,946 $35,804 
We own 32.5%Amortization of Toys. On September 18, 2017, Toys filed a voluntary petition under Chapter 11acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental revenues of $1,367,000 and $917,000 for the three months ended March 31, 2023 and 2022, respectively. Estimated annual amortization for each of the United States Bankruptcy Code. We carry our Toys investment at zero. Further, we do not hold any debtfive succeeding years commencing January 1, 2024 is below:
(Amounts in thousands)
2024$2,352 
2025941 
2026299 
2027(148)
2028(43)
Amortization of Toysall other identified intangible assets (a component of depreciation and do not guarantee anyamortization expense) was $1,987,000 and $4,125,000 for the three months ended March 31, 2023 and 2022, respectively. Estimated annual amortization for each of Toys’ obligations. For income tax purposes, we carry our investment in Toys at approximately $420,000,000 which could result in a tax deduction in future periods.the five succeeding years commencing January 1, 2024 is below:

Below is a schedule summarizing our investments in partially owned entities.
(Amounts in thousands)
2024$7,128 
20256,078 
20265,884 
20275,449 
20284,290 
26
(Amounts in thousands)Percentage Ownership at Balance as of
  September 30, 2017 September 30, 2017 December 31, 2016
Investments:     
 
Partially owned office buildings/land (1)
Various $542,778
 $734,536
 Alexander’s32.4% 125,632
 129,324
 PREIT8.0% 66,477
 122,883
 UE4.5% 46,542
 24,523
 
Other investments (2)
Various 283,553
 366,988
    $1,064,982
 $1,378,254
       
 
330 Madison Avenue(3)
25.0% $(53,237) $—
 
7 West 34th Street (4)
53.0% (46,013) (43,022)
    $(99,250) $(43,022)
____________________
(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue (2016 only - see (3) below), 512 West 22nd Street, 85 Tenth Avenue, 61 Ninth Avenue and others.
(2)Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, Moynihan Office Building, Toys (which has a carrying amount of zero), and others.
(3)Our negative basis resulted from a refinancing distribution and is included in "other liabilities" on our consolidated balance sheets as of September 30, 2017.
(4)Our negative basis results from a deferred gain from the sale of a 47.0% ownership interest in the property and is included in "other liabilities" on our consolidated balance sheets.


25

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

6.Investments in Partially Owned Entities - continued

9.    Debt
BelowSecured Debt
150 West 34th Street Loan Participation
On January 9, 2023, our $105,000,000 participation in the $205,000,000 mortgage loan on 150 West 34th Street was repaid, which reduced “other assets” and “mortgages payable, net” on our consolidated balance sheets by $105,000,000. The remaining $100,000,000 mortgage loan balance bears interest at SOFR plus 1.86%, subject to an interest rate cap arrangement with a SOFR strike rate of 4.10%, and matures in May 2024.

The following is a schedulesummary of net (loss) income from partially owned entities.our debt:
(Amounts in thousands)(Amounts in thousands)Percentage Ownership at September 30, 2017 For the Three Months Ended September 30, For the Nine Months Ended September 30,(Amounts in thousands)
Weighted Average Interest Rate at March 31, 2023(1)
Balance as of
 2017 2016 2017 2016March 31, 2023December 31, 2022
Our share of net (loss) income:         
Mortgages Payable:Mortgages Payable:
Fixed rateFixed rate3.63%$3,569,550 $3,570,000 
Variable rate(2)
Variable rate(2)
5.57%2,197,665 2,307,615 
TotalTotal4.37%5,767,215 5,877,615 
Deferred financing costs, net and otherDeferred financing costs, net and other(49,877)(48,597)
Total, netTotal, net$5,717,338 $5,829,018 
Unsecured Debt:Unsecured Debt:
Senior unsecured notesSenior unsecured notes3.02%$1,200,000 $1,200,000 
Deferred financing costs, net and otherDeferred financing costs, net and other(7,658)(8,168)
Senior unsecured notes, netSenior unsecured notes, net1,192,342 1,191,832 
PREIT (see page 23 for details):        
Unsecured term loanUnsecured term loan4.05%800,000 800,000 
Deferred financing costs, net and otherDeferred financing costs, net and other(6,483)(6,807)
Unsecured term loan, netUnsecured term loan, net793,517 793,193 
Non-cash impairment loss8.0% $(44,465) $—
 $(44,465) $—
Unsecured revolving credit facilitiesUnsecured revolving credit facilities3.88%575,000 575,000 
Equity in net earnings (5,283) 52
 (9,015) (4,763)
 (49,748) 52
 (53,480) (4,763)
Alexander's (see page 23 for details):        
Equity in net earnings32.4% 6,510
 6,891
 20,092
 20,640
Management, leasing and development fees 1,335
 1,894
 4,351
 5,307
 7,845
 8,785
 24,443
 25,947
UE (see page 23 for details):        
Net gain resulting from UE operating partnership unit issuances4.5% 5,200
 —
 21,100
 —
Equity in net earnings 708
 1,949
 4,693
 3,896
Management fees 100
 209
 518
 627
 6,008
 2,158
 26,311
 4,523
        
Partially owned office buildings/land(1)
Various (5,551) (8,642) (23,508) (29,882)
        
Other investments(2)
Various (355) 1,458
 31,812
 8,067
        
 $(41,801) $3,811
 $5,578
 $3,892
Total, netTotal, net$2,560,859 $2,560,025 
____________________
(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others.
(2)Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, Toys, and others. In the second quarter of 2017, we recognized $26,687 of net gains, comprised of $15,314 representing our share of a net gain on the sale of Suffolk Downs and $11,373 representing the net gain on repayment of our debt investments in Suffolk Downs JV. See page 24 for details.

(1)Represents the interest rate in effect as of March 31, 2023 based on the appropriate reference rate as of the contractual reset date plus contractual spread, adjusted for hedging instruments, as applicable. See Note 13 - Fair Value Measurements for further information on our consolidated hedging instruments.
(2)As of March 31, 2023, $2,009,119 of our variable rate debt is subject to interest rate cap arrangements. The interest rate cap arrangements have a weighted average strike rate of 3.98% and a weighted average remaining term of 11 months.

27
26

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

7.
Dispositions

10.    Redeemable Noncontrolling Interests
Discontinued Operations

On July 17, 2017, we completed the spin-off of our Washington, DC segment comprised of (i) 37 office properties totaling over 11.1 million square feet, five multifamily properties with 3,133 units and five other assets totaling approximately 406,000 square feet and (ii) 18 future development assets totaling over 10.4 million square feet of estimated potential development density, and (iii) $412.5 million of cash ($275.0 million plus The Bartlett financing proceeds less transaction costs and other mortgage items) to JBG SMITH Properties (“JBGS”). On July 18, 2017, JBGS was combined with the management business and certain Washington, DC assets of The JBG Companies (“JBG”), a Washington, DC real estate company. Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, is the Chairman of the Board of Trustees of JBGS. Mitchell Schear, former President of our Washington, DC business, is a member of the Board of Trustees of JBGS. We are providing transition services to JBGS initially including information technology, financial reporting and payroll services. The spin-off was effected through a tax-free distribution by Vornado to the holders of Vornado common shares of all of the common shares of JBGS at the rate of one JBGS common share for every two common shares of Vornado and the distribution by the Operating Partnership to the holders of its common units of all of the outstanding common units of JBG SMITH Properties LP (“JBGSLP”) at the rate of one JBGSLP common unit for every two common units of VRLP held of record. See JBGS’ Amendment No. 3 on Form 10 (File No. 1-37994) filed with the Securities and Exchange Commission on June 9, 2017 for additional information. Beginning in the third quarter of 2017, the historical financial results of our Washington, DC segment are reflected in our consolidated financial statements as discontinued operations for all periods presented.

On June 20, 2017, we completed a $220,000,000 financing of The Bartlett residential building. The five-year interest-only loan is at LIBOR plus 1.70% (2.90% at September 30, 2017), and matures in June 2022. On July 17, 2017, the property, the loan and the $217,000,000 of net proceeds were transferred to JBGS in connection with the tax-free spin-off of our Washington, DC segment.

On July 17, 2017, prior to completion of the tax-free spin-off of our Washington, DC segment, we repaid the $43,581,000 LIBOR plus 1.25% mortgage encumbering 1700 and 1730 M Street which was scheduled to mature in August 2017. The unencumbered property was then transferred to JBGS in connection with the tax-free spin-off of our Washington, DC segment.



27
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

7.Dispositions - continued

Discontinued Operations - continued

The tables below set forth the assets and liabilities related to discontinued operations as of September 30, 2017 and December 31, 2016 and their combined results of operations and cash flows for the three and nine months ended September 30, 2017 and 2016.
(Amounts in thousands)Balance as of
 September 30, 2017 December 31, 2016
Assets related to discontinued operations:   
Real estate, net$—
 $3,222,720
Other assets1,774
 345,893
 $1,774
 $3,568,613
Liabilities related to discontinued operations:   
Mortgages payable, net$—
 $1,165,015
Other liabilities3,602
 94,428
 $3,602
 $1,259,443

(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
(Loss) income from discontinued operations:       
Total revenues$25,747
 $134,912
 $260,969
 $392,108
Total expenses21,708
 109,506
 211,930
 331,377
 4,039
 25,406
 49,039
 60,731
JBG SMITH Properties spin-off transaction costs(53,581) (2,739) (67,045) (4,597)
Net gains on sale of real estate and a lease position1,530
 2,864
 3,797
 5,074
Income (loss) from partially owned assets93
 316
 435
 (3,363)
Impairment losses—
 (465) —
 (161,165)
Pretax (loss) income from discontinued operations(47,919) 25,382
 (13,774) (103,320)
Income tax expense(11) (302) (727) (884)
(Loss) income from discontinued operations$(47,930) $25,080
 $(14,501) $(104,204)

     
(Amounts in thousands) For the Nine Months Ended September 30,
  2017 2016
Cash flows related to discontinued operations:    
Cash flows from operating activities $39,581
 $107,797
Cash flows from investing activities (48,377) (176,374)




28
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

8.
Identified Intangible Assets and Liabilities

The following summarizes our identified intangible assets (primarily above-market leases) and liabilities (primarily acquired below-market leases) as of September 30, 2017 and December 31, 2016.
(Amounts in thousands)Balance as of
 September 30, 2017 December 31, 2016
Identified intangible assets:   
Gross amount$310,881
 $384,090
Accumulated amortization(144,683) (194,422)
Total, net$166,198
 $189,668
Identified intangible liabilities (included in deferred revenue):   
Gross amount$544,956
 $550,454
Accumulated amortization(326,661) (298,238)
Total, net$218,295
 $252,216

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in an increase to rental income of $11,054,000 and $11,529,000 for the three months ended September 30, 2017 and 2016, respectively, and $34,758,000 and $40,664,000 for the nine months ended September 30, 2017 and 2016, respectively. Estimated annual amortization of acquired below-market leases, net of acquired above-market leases, for each of the five succeeding years commencing January 1, 2018 is as follows:
 (Amounts in thousands)  
 2018$42,556
 
 201930,820
 
 202022,185
 
 202117,370
 
 202214,271
 

Amortization of all other identified intangible assets (a component of depreciation and amortization expense) was $6,069,000 and $6,646,000 for the three months ended September 30, 2017 and 2016, respectively, and $19,896,000 and $22,319,000 for the nine months ended September 30, 2017 and 2016, respectively.  Estimated annual amortization of all other identified intangible assets including acquired in-place leases, customer relationships, and third party contracts for each of the five succeeding years commencing January 1, 2018 is as follows:
 (Amounts in thousands)  
 2018$19,510
 
 201915,229
 
 202012,020
 
 202111,041
 
 20229,433
 

We are a tenant under ground leases for certain properties.  Amortization of these acquired below-market leases, net of above-market leases, resulted in an increase to rent expense (a component of operating expense) of $437,000 and $437,000 for the three months ended September 30, 2017 and 2016, respectively, and $1,310,000 and $1,310,000 for the nine months ended September 30, 2017 and 2016, respectively.  Estimated annual amortization of these below-market leases, net of above-market leases, for each of the five succeeding years commencing January 1, 2018 is as follows:
 (Amounts in thousands)  
 2018$1,747
 
 20191,747
 
 20201,747
 
 20211,747
 
 20221,747
 



29
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

9.
Debt

The following is a summary of our debt:
(Amounts in thousands)  Balance as of
 Interest Rate at September 30, 2017 September 30, 2017 December 31, 2016
Mortgages Payable:     
Fixed rate3.65% $5,466,886
 $5,479,547
Variable rate3.12% 2,737,877
 2,727,133
Total3.47% 8,204,763
 8,206,680
Deferred financing costs, net and other  (73,157) (93,432)
Total, net  $8,131,606
 $8,113,248
      
Unsecured Debt:     
Senior unsecured notes3.68% $850,000
 $850,000
Deferred financing costs, net and other  (3,359) (4,423)
Senior unsecured notes, net  846,641
 845,577
      
Unsecured term loan2.39% 375,000
 375,000
Deferred financing costs, net and other  (1,646) (2,785)
Unsecured term loan, net  373,354
 372,215
      
Unsecured revolving credit facilities—% —
 115,630
      
Total, net  $1,219,995
 $1,333,422




30
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

10.
Redeemable Noncontrolling Interests/Redeemable Partnership Units

Redeemable noncontrolling interests on Vornado’s consolidated balance sheets and redeemable partnership units on the consolidated balance sheets of the Operating Partnership are primarily comprised of Class A Operating Partnership units held by third parties and are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership.
Below is a table summarizing the activity of redeemable noncontrolling partnership units.
 (Amounts in thousands)  
 Balance as of December 31, 2015$1,229,221
 
 Net income11,410
 
 Other comprehensive income2,326
 
 Distributions(23,582) 
 Redemption of Class A units for common shares/units, at redemption value(28,126) 
 Adjustments to carry redeemable Class A units at redemption value30,260
 
 Other, net26,814
 
 Balance as of September 30, 2016$1,248,323
 
    
 Balance as of December 31, 2016$1,278,446
 
 Net income9,057
 
 Other comprehensive income188
 
 Distributions(25,663) 
 Redemption of Class A units for common shares/units, at redemption value(34,564) 
 Adjustments to carry redeemable Class A units at redemption value (including $224,069 attributable to the spin-off of JBGS)(286,928) 
 Other, net30,168
 
 Balance as of September 30, 2017$970,704
 

(Amounts in thousands)For the Three Months Ended March 31,
20232022
Beginning balance$348,692 $590,975 
Net income429 1,994 
Other comprehensive (loss) income(6,080)5,134 
Distributions(5,601)(7,584)
Redemption of Class A units for Vornado common shares, at redemption value(187)(717)
Redeemable Class A unit measurement adjustment23,843 46,651 
Other, net(9,353)13,305 
Ending balance$351,743 $649,758 
As of September 30, 2017March 31, 2023 and December 31, 2016,2022, the aggregate redemption value of redeemable Class A units of the Operating Partnership, which are those units held by third parties, was $965,276,000$348,208,000 and $1,273,018,000, respectively.$345,157,000, respectively, based on the aggregate carrying amount of such units.

On April 26, 2023, Vornado announced that it will postpone dividends on its common shares until the end of 2023, at which time, upon finalization of its 2023 taxable income, including the impact of asset sales, it will pay the 2023 dividend in either (i) cash, or (ii) a combination of cash and securities, as determined by its Board of Trustees. Distributions to redeemable Class A unitholders will correspondingly be postponed with the postponement of dividends to Vornado common shareholders.
Redeemable noncontrolling interests/redeemable partnership units exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC Topic 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares.. Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $50,561,000$49,383,000 as of September 30, 2017March 31, 2023 and December 31, 2016.2022, respectively. Changes in the value from period to period, if any, are charged to “interest and debt expense” on our consolidated statements of income.

Redeemable Noncontrolling Interest in a Consolidated Subsidiary

A consolidated joint venture, in which we hold a 95% interest, developed and owns The Farley Building (the "Farley Project"). During 2020, a historic tax credit investor (the "Tax Credit Investor") funded $92,400,000 of capital contributions to the Farley Project and is expected to make additional capital contributions in future periods.
The arrangement includes a put option whereby the joint venture may be obligated to purchase the Tax Credit Investor’s ownership interest in the Farley Project at a future date. The put price is calculated based on a pre-determined formula. As exercise of the put option is outside of the joint venture’s control, the Tax Credit Investor’s interest, together with the put option, have been recorded to “redeemable noncontrolling interest in a consolidated subsidiary” on our consolidated balance sheets. The redeemable noncontrolling interest is recorded at the greater of the carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership. There was no adjustment required for the three months ended March 31, 2023 and 2022.
Below is a table summarizing the activity of the redeemable noncontrolling interest in a consolidated subsidiary.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Beginning balance$88,040 $97,708 
Net loss(9,244)(305)
Ending balance$78,796 $97,403 

28
31

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

11.    Shareholders' Equity/Partners' Capital
11.
Accumulated Other Comprehensive Income ("AOCI")
The following tables settable sets forth the changes in accumulated other comprehensive income by component.details of our dividends/distributions per common share/Class A unit and dividends/distributions per share/unit for each class of preferred shares/units of beneficial interest.
(Amounts in thousands)Total 
Securities
available-
for-sale
 
Pro rata share of
nonconsolidated
subsidiaries' OCI
 
Interest
rate
swaps
 Other
For the Three Months Ended September 30, 2017         
Balance as of June 30, 2017$115,839
 $114,290
 $(3,821) $12,702
 $(7,332)
OCI before reclassifications6,608
 5,656
 (626) 1,976
 (398)
Amounts reclassified from AOCI(646) —
 (646)
(1) 
—
 —
Net current period OCI5,962
 5,656
 (1,272) 1,976
 (398)
Balance as of September 30, 2017$121,801
 $119,946
 $(5,093) $14,678
 $(7,730)
          
For the Three Months Ended September 30, 2016         
Balance as of June 30, 2016$72,556
 $117,561
 $(9,941) $(30,538) $(4,526)
OCI before reclassifications9,818
 3,685
 (915) 7,688
 (640)
Amounts reclassified from AOCI—
 —
 —
 —
 —
Net current period OCI9,818
 3,685
 (915) 7,688
 (640)
Balance as of September 30, 2016$82,374
 $121,246
 $(10,856) $(22,850) $(5,166)
          
For the Nine Months Ended September 30, 2017         
Balance as of December 31, 2016$118,972
 $130,505
 $(12,058) $8,066
 $(7,541)
OCI before reclassifications(5,793) (10,559) (1,657) 6,612
 (189)
Amounts reclassified from AOCI8,622
 —
 8,622
(1) 
—
 —
Net current period OCI2,829
 (10,559) 6,965
 6,612
 (189)
Balance as of September 30, 2017$121,801
 $119,946
 $(5,093) $14,678
 $(7,730)
          
For the Nine Months Ended September 30, 2016         
Balance as of December 31, 2015$46,921
 $78,448
 $(9,319) $(19,368) $(2,840)
OCI before reclassifications35,453
 42,798
 (1,537) (3,482) (2,326)
Amounts reclassified from AOCI—
 —
 —
 —
 —
Net current period OCI35,453
 42,798
 (1,537) (3,482) (2,326)
Balance as of September 30, 2016$82,374
 $121,246
 $(10,856) $(22,850) $(5,166)
(Per share/unit)For the Three Months Ended March 31,
20232022
Common shares/Class A units held by Vornado: authorized 250,000,000 shares/units$0.375 $0.53 
Preferred shares/units(1)
Convertible Preferred:
6.5% Series A: authorized 12,902 shares/units(2)
0.8125 0.8125 
Cumulative Redeemable Preferred(1)(3):
 
5.40% Series L: authorized 13,800,000 shares/units0.3375 0.3375 
5.25% Series M: authorized 13,800,000 shares/units0.3281 0.3281 
5.25% Series N: authorized 12,000,000 shares/units0.3281 0.3281 
4.45% Series O: authorized 12,000,000 shares/units0.2781 0.2781 
____________________
(1)Reclassified upon receipt of proceeds related to the sale of an investment by a nonconsolidated subsidiary.

(1)Dividends on preferred shares and distributions on preferred units are cumulative and are payable quarterly in arrears.

(2)Redeemable at the option of Vornado under certain circumstances, at a redemption price of 1.9531 common shares/Class A units per Series A preferred share/unit plus accrued and unpaid dividends/distributions through the date of redemption, or convertible at any time at the option of the holder for 1.9531 common shares/Class A units per Series A preferred share/unit.

(3)Series L and Series M preferred shares/units are redeemable at Vornado's option at a redemption price of $25.00 per share/unit, plus accrued and unpaid dividends/distributions through the date of redemption. Series N preferred shares/units are redeemable commencing November 2025 and Series O preferred shares/units are redeemable commencing September 2026, each at a redemption price of $25.00 per share/unit.
32
On April 26, 2023, Vornado announced that it will postpone dividends on its common shares until the end of 2023, at which time, upon finalization of its 2023 taxable income, including the impact of asset sales, it will pay the 2023 dividend in either (i) cash, or (ii) a combination of cash and securities, as determined by its Board of Trustees. Distributions to Class A unitholders of the Operating Partnership will correspondingly be postponed with the postponement of dividends to Vornado common shareholders.
VORNADO REALTY TRUST AND VORNADO REALTY L.P.Vornado also announced that its Board of Trustees has authorized the repurchase of up to $200,000,000 of its outstanding common shares under a newly established share repurchase program. Cash retained from dividends or from asset sales will be used to reduce debt and/or fund share repurchases. To the extent Vornado repurchases any of its common shares, in order to fund the common share repurchase and maintain the one-to-one ratio of the number of Vornado common shares outstanding and the number of Class A units owned by Vornado, the Operating Partnership will repurchase from Vornado an equal number of its Class A units at the same price.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUEDShare repurchases may be made from time to time in the open market, through privately negotiated transactions or through other means as permitted by federal securities laws, including through block trades, accelerated share repurchase transactions and/or trading plans intended to qualify under Rule 10b5-1. The timing, manner, price and amount of any repurchases will be determined in Vornado’s discretion depending on business, economic and market conditions, corporate and regulatory requirements, prevailing prices for Vornado’s common shares, alternative uses for capital and other considerations. The program does not have an expiration date and may be suspended or discontinued at any time and does not obligate Vornado to make any repurchases of its common shares.
(UNAUDITED)

12.
12.    Variable Interest Entities ("VIEs")

Unconsolidated VIEs

As of September 30, 2017March 31, 2023 and December 31, 2016,2022, we havehad several unconsolidated VIEs. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities does not give us power over decisions that significantly affect these entities’ economic performance. We account for our investment in these entities under the equity method (see Note 6 –Investments in Partially Owned Entities). As of September 30, 2017March 31, 2023 and December 31, 2016,2022, the net carrying amount of our investments in these entities was $350,920,000$56,019,000 and $392,150,000,$68,223,000, respectively, and our maximum exposure to loss in these entities is limited to the carrying amount of our investments.

Consolidated VIEs

Our most significant consolidated VIEs are the Operating Partnership (for Vornado), real estate fund investments,the Farley Project and certain properties that have noncontrolling interests. These entities are VIEs because the noncontrolling interests do not have substantive kick-out or participating rights. We consolidate these entities because we control all of their significant business activities.

As of September 30, 2017,March 31, 2023, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $3,632,567,000$5,001,249,000 and $1,763,223,000,$2,764,740,000, respectively. As of December 31, 2016,2022, the total assets and liabilities of our consolidated VIEs, excluding the Operating Partnership, were $3,638,483,000$4,423,995,000 and $1,762,322,000,$2,345,726,000, respectively.

29


33

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

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

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

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities,investments in U.S. Treasury bills (classified as available-for-sale), (ii) real estate fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet)sheets), (iii) loans receivable (for which we have elected the fair value option under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10")), (iv) interest rate swaps and caps and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below, aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy ashierarchy.
(Amounts in thousands)As of March 31, 2023
TotalLevel 1Level 2Level 3
Investments in U.S. Treasury bills (1)
$276,645 $276,645 $— $— 
Deferred compensation plan assets ($11,209 included in restricted cash and $87,787 in other assets)98,996 58,369 — 40,627 
Loans receivable ($51,092 included in investments in partially owned entities and $4,177 in other assets)55,269 — — 55,269 
Interest rate swaps and caps (included in other assets)129,208 — 129,208 — 
Total assets$560,118 $335,014 $129,208 $95,896 
Mandatorily redeemable instruments (included in other liabilities)$49,383 $49,383 $— $— 
Interest rate swaps (included in other liabilities)15,009 — 15,009 — 
Total liabilities$64,392 $49,383 $15,009 $— 
(Amounts in thousands)As of December 31, 2022
TotalLevel 1Level 2Level 3
Investments in U.S. Treasury bills
$471,962 $471,962 $— $— 
Deferred compensation plan assets ($7,763 included in restricted cash and $88,559 in other assets)96,322 57,406 — 38,916 
Loans receivable ($50,091 included in investments in partially owned entities and $4,306 in other assets)54,397 — — 54,397 
Interest rate swaps and caps (included in other assets)183,804 — 183,804 — 
Total assets$806,485 $529,368 $183,804 $93,313 
Mandatorily redeemable instruments (included in other liabilities)$49,383 $49,383 $— $— 
____________________
(1) During the three months ended March 31, 2023, werealized proceeds of September 30, 2017$200,000 from maturing U.S. Treasury bills. As of March 31, 2023, our investments in U.S. Treasury bills had an aggregate accreted cost of $276,615 and have remaining maturities of less than one year. As of December 31, 2016, respectively.

2022, our investments in U.S. Treasury bills had an aggregate accreted cost of $473,171.
30
(Amounts in thousands)As of September 30, 2017
 Total Level 1 Level 2 Level 3
Marketable securities$193,145
 $193,145
 $—
 $—
Real estate fund investments351,750
 —
 —
 351,750
Deferred compensation plan assets ($2,501 included in restricted cash and $103,743 in other assets)106,244
 56,960
 —
 49,284
Interest rate swaps (included in other assets)20,880
 —
 20,880
 —
Total assets$672,019
 $250,105
 $20,880
 $401,034
        
Mandatorily redeemable instruments (included in other liabilities)$50,561
 $50,561
 $—
 $—
Interest rate swap (included in other liabilities)3,090
 —
 3,090
 —
Total liabilities$53,651
 $50,561
 $3,090
 $—
        
 As of December 31, 2016
 Total Level 1 Level 2 Level 3
Marketable securities$203,704
 $203,704
 $—
 $—
Real estate fund investments462,132
 —
 —
 462,132
Deferred compensation plan assets ($4,187 included in restricted cash and $116,996 in other assets)121,183
 63,739
 —
 57,444
Interest rate swaps (included in other assets)21,816
 —
 21,816
 —
Total assets$808,835
 $267,443
 $21,816
 $519,576
        
Mandatorily redeemable instruments (included in other liabilities)$50,561
 $50,561
 $—
 $—
Interest rate swap (included in other liabilities)10,122
 —
 10,122
 —
Total liabilities$60,683
 $50,561
 $10,122
 $—



34

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

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

Deferred Compensation Plan Assets
Real Estate Fund InvestmentsDeferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports that provide net asset values on a fair value basis from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The period of time over which these underlying assets are expected to be liquidated is unknown. The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.

As of September 30, 2017, we had five real estate fund investments with an aggregateThe table below summarizes the changes in the fair value of $351,750,000, or $95,136,000deferred compensation plan assets that are classified as Level 3.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Beginning balance$38,916 $45,016 
Purchases643 843 
Sales(506)(907)
Realized and unrealized gains (losses)1,113 (1,240)
Other, net461 814 
Ending balance$40,627 $44,526 
Loans Receivable
Loans receivable consist of loan investments in excess of cost.real estate related assets for which we have elected the fair value option under ASC 825-10. These investments are classified as Level 3. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 0.8 to 3.3 years. Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor. Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs.

The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property’s outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, current and anticipated market conditions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these real estate fund investments at September 30, 2017 and December 31, 2016.loans receivable.
  Range 
Weighted Average
(based on fair value of investments)
Unobservable Quantitative Input September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Discount rates 10.0% to 14.9% 10.0% to 14.9% 12.5% 12.6%
Terminal capitalization rates 4.7% to 5.8% 4.3% to 5.8% 5.4% 5.3%

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

Unobservable Quantitative InputAs of March 31, 2023As of December 31, 2022
Discount rates7.5%7.5%
Terminal capitalization rates5.5%5.5%
The table below summarizes the changes in the fair value of real estate fund investmentsloans receivable that are classified as Level 3, for the three and nine months ended September 30, 2017 and 2016.3.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Beginning balance$54,397 $50,182 
Interest accrual1,283 1,199 
Paydowns(411)(533)
Ending balance$55,269 $50,848 
31
(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Beginning balance$455,692
 $524,150
 $462,132
 $574,761
Dispositions/distributions(91,606) —
 (91,606) (71,888)
Net unrealized (loss) gain on held investments(11,220) (4,764) (28,860) 16,091
Net realized gains on exited investments35,620
 —
 35,861
 14,676
Previously recorded unrealized gains on exited investment(36,736) —
 (25,538) (14,254)
Other, net—
 —
 (239) —
Ending balance$351,750
 $519,386
 $351,750
 $519,386



35

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

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

Derivatives and Hedging
Deferred Compensation Plan Assets

Deferred compensation plan assetsWe recognize the fair values of all derivatives in "other assets" or "other liabilities" on our consolidated balance sheets. Derivatives that are classified as Level 3 consist of investments in limited partnerships and investment funds, whichnot hedges are managed by third parties. We receive quarterly financial reports from a third party administrator, which are compiled from the quarterly reports providedadjusted to them from each limited partnership and investment fund. The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firmsthrough earnings. If a derivative is a hedge, depending on an annual basis. The third party administrator does not adjust these values in determining our sharethe nature of the net assets and we do not adjust these values when reported in our consolidated financial statements.

The table below summarizes thehedge, changes in the fair value of deferred compensation plan assets that are classified as Level 3, for the three and nine months ended September 30, 2017 and 2016.
(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Beginning balance$49,849
 $60,140
 $57,444
 $59,186
Purchases2,176
 1,251
 3,989
 3,523
Sales(3,810) (3,737) (15,922) (5,888)
Realized and unrealized gains (losses)246
 (1,055) 2,151
 (743)
Other, net823
 316
 1,622
 837
Ending balance$49,284
 $56,915
 $49,284
 $56,915

Fair Value Measurements on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist of our investmentderivative will either be offset against the change in PREIT that was written-down to its estimated fair value at September 30, 2017. See Note 6 - Investments in Partially Owned Entities for details of the impairment loss related to PREIT recognized during 2017. There are no assets measured at fair value on a nonrecurring basis at December 31, 2016. The table below presents the fair value of thisthe hedged asset, by its levelliability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of hedging instruments and hedged items, but will have no effect on cash flows.
The following table summarizes our consolidated hedging instruments, all of which hedge variable rate debt, as of March 31, 2023 and December 31, 2022.
(Amounts in thousands)As of March 31, 2023As of December 31,
2022
Notional AmountAll-In Swapped RateSwap Expiration DateFair Value AssetFair Value LiabilityFair Value Asset
Interest rate swaps:
555 California Street mortgage loan:
In-place swap$840,000 (1)2.26%05/24$39,859 $— $49,888 
Forward swap (effective 05/24)840,000 (1)5.92%05/26— 14,239 — 
770 Broadway mortgage loan700,000 4.98%07/2718,448 — 29,226 
PENN 11 mortgage loan500,000 2.22%03/2420,640 — 26,587 
Unsecured revolving credit facility575,000 3.88%08/2715,354 — 24,457 
Unsecured term loan(2)
800,000 4.05%(2)12,408 770 21,024 
100 West 33rd Street mortgage loan480,000 5.06%06/27283 — 6,886 
888 Seventh Avenue mortgage loan200,000 (3)4.76%09/273,458 — 6,544 
4 Union Square South mortgage loan99,550 (4)3.74%01/253,153 — 4,050 
Interest rate caps:
1290 Avenue of the Americas mortgage loan950,000 (5)11/235,765 — 7,590 
One Park Avenue mortgage loan(6)
525,000 (6)03/257,718 — 5,472 
Various mortgage loans2,122 — 2,080 
$129,208 $15,009 $183,804 
____________________
(1)Represents our 70.0% share of the $1.2 billion mortgage loan. In March 2023, we entered into the forward swap arrangement detailed above.
(2)Represents the aggregate fair value hierarchy.of various interest rate swap arrangements to hedge interest payments on our unsecured term loan. In February 2023, we entered into a forward interest rate swap arrangement for $150,000 of the $800,000 unsecured term loan. The unsecured term loan, which matures in December 2027, is subject to various interest rate swap arrangements through August 2027, which are detailed below:
Swapped BalanceAll-In Swapped RateUnswapped Balance
(bears interest at S+130)
Through 10/23$800,000 4.05%$— 
10/23 through 07/25700,000 4.53%100,000 
07/25 through 10/26550,000 4.36%250,000 
10/26 through 08/2750,000 4.04%750,000 

(3)The remaining $72,400 amortizing mortgage loan balance bears interest at a floating rate of SOFR plus 1.80% (6.47% as of March 31, 2023).
(4)The remaining $20,450 mortgage loan balance bears interest at a floating rate of SOFR plus 1.50% (6.17% as of March 31, 2023).
(5)LIBOR cap strike rate of 4.00%.
(6)SOFR strike rate of 3.89%. In March 2023, we entered into a forward cap arrangement which expires in March 2025 and is effective upon the March 2024 expiration of the currently in-place cap. The forward cap has a SOFR strike rate of 3.89%.
32
(Amounts in thousands)As of September 30, 2017
 Total Level 1 Level 2 Level 3
Investment in PREIT$65,563
 $65,563
 $—
 $—


36

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

13.    Fair Value Measurements - continued
Fair Value Measurements on a Nonrecurring Basis
There were no assets measured at fair value on a nonrecurring basis on our consolidated balance sheets as of March 31, 2023. As of December 31, 2022, we had assets measured at fair value on a nonrecurring basis on our consolidated balance sheets with an aggregate fair value of $2,352,328,000, representing real estate investments, including our investment in Fifth Avenue and Times Square JV as well as wholly owned street retail assets, that were written down to estimated fair value for impairment purposes and were classified as Level 3 investments. Our estimate of the fair value of these assets was measured using discounted cash flow analyses based upon market conditions and expectations of growth and utilized unobservable quantitative inputs including capitalization rates and discount rates. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these real estate assets.
13.Fair Value MeasurementsAs of December 31, 2022
Unobservable Quantitative InputRangeWeighted Average
(based on fair value of investments)
Discount rates7.50% - continued8.00%7.52%
Terminal capitalization rates4.75% - 5.50%4.78%
Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government), and our secured and unsecured debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair valuesvalue of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair valuesvalue of our secured debt and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of September 30, 2017 and December 31, 2016.instruments.
(Amounts in thousands)(Amounts in thousands)As of September 30, 2017 As of December 31, 2016(Amounts in thousands)As of March 31, 2023As of December 31, 2022
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Cash equivalentsCash equivalents$1,013,282
 $1,013,282
 $1,307,105
 $1,307,105
Cash equivalents$578,088 $578,000 $402,903 $403,000 
Debt:Debt:       Debt:
Mortgages payable$8,204,763
 $8,223,000
 $8,206,680
 $8,163,000
Mortgages payable$5,767,215 $5,577,000 $5,877,615 $5,697,000 
Senior unsecured notes850,000
 885,000
 850,000
 899,000
Senior unsecured notes1,200,000 972,000 1,200,000 1,021,000 
Unsecured term loan375,000
 375,000
 375,000
 375,000
Unsecured term loan800,000 800,000 800,000 800,000 
Unsecured revolving credit facilities—
 —
 115,630
 116,000
Unsecured revolving credit facilities575,000 575,000 575,000 575,000 
Total$9,429,763
(1) 
$9,483,000
 $9,547,310
(1) 
$9,553,000
Total$8,342,215 (1)$7,924,000 $8,452,615 (1)$8,093,000 
____________________
(1)Excludes $78,162$64,018 and $100,640$63,572 of deferred financing costs, net and other as of September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively.

14.
Stock-based Compensation

Vornado’s 2010 Omnibus Share Plan provides for grants of incentive and non-qualified Vornado stock options, restricted stock, restricted Operating Partnership units and Out-Performance Plan awards to certain of our employees and officers. We account for all equity-based compensation in accordance with ASC 718. Equity-based compensation expense was $5,693,000 and $6,117,000 for the three months ended September 30, 2017 and 2016, respectively, and $27,319,000 and $27,903,000 for the nine months ended September 30, 2017 and 2016, respectively.

15.
Fee and Other Income

The following table sets forth the details of fee and other income:
33
(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
BMS cleaning fees$26,429
 $24,532
 $75,925
 $68,656
Management and leasing fees2,330
 1,935
 7,382
 5,694
Lease termination fees991
 1,819
 5,947
 7,123
Other income3,542
 2,357
 8,958
 6,561
 $33,292
 $30,643
 $98,212
 $88,034

Management and leasing fees include management fees from Interstate Properties, a related party, of $125,000 and $128,000 for the three months ended September 30, 2017 and 2016, respectively, and $377,000 and $390,000 for the nine months ended September 30, 2017 and 2016, respectively. The above table excludes fee income from partially owned entities, which is included in “(loss) income from partially owned entities” (see Note 6 – Investments in Partially Owned Entities).



37

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

16.
Interest and Other Investment Income, Net

14.    Stock-based Compensation
We account for all equity-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation. Stock-based compensation expense, a component of "general and administrative" expense on our consolidated statements of income, was $11,714,000 and $13,155,000 for the three months ended March 31, 2023 and 2022, respectively.
2023 Long-Term Performance Award
On January 11, 2023, the Compensation Committee of Vornado's Board of Trustees approved the 2023 Long-Term Performance Plan (“LTPP"), a multi-year, restricted operating partnership ("LTIP") units-based performance equity compensation plan. Awards under the 2023 LTPP are bifurcated between operational performance (50%) and relative performance (50%) measurements and may be earned at specified threshold, target and maximum levels.
The operational component awards may be earned based on Vornado’s 2023 operational performance in the following categories:
•FFO, as adjusted per share (75% weighting); and
•ESG performance metrics consisting of greenhouse emissions reductions, GRESB score and Green Building Certification (LEED) achievements (aggregate 25% weighting).
Any LTPP award units tentatively earned based on Vornado’s 2023 operational performance are subject to an absolute return modifier pursuant to which such award units are subject to a potential reduction (but not increase) of up to 30% if Vornado’s aggregate total three-year total shareholder return ("TSR") is below specified levels.
Awards under relative components may be earned based on Vornado’s three-year TSR, measured against the Dow Jones U.S. Real Estate Office Index (50% weighting) and a Northeast peer group custom index (50% weighting). Awards earned under the relative component of the 2023 LTPP are subject to reductions of up to 30% if Vornado’s three-year TSR is below specified levels.
If the designated performance objectives are achieved, awards earned under 2023 LTPP will vest 50% in January 2026 and 50% in January 2027. In addition, the Chief Executive Officer is required to hold any earned and vested awards for three years following each such vesting date and all other award recipients are required to hold such awards for one year following each such vesting date. Dividends on awards granted under the 2023 LTPP accrue during the applicable performance period and are paid to participants if awards are ultimately earned based on the achievement of the designated performance objectives.
15.    Interest and Other Investment Income, Net
The following table sets forth the details of interest and other investment income, net:
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Interest on cash and cash equivalents and restricted cash$5,674 $64 
Amortization of discount on investments in U.S. Treasury bills3,445 129 
Interest on loans receivable484 825 
$9,603 $1,018 
(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Dividends on marketable securities$3,309
 $3,354
 $9,923
 $9,799
Mark-to-market income of investments in our deferred compensation plan (1)
1,975
 204
 5,233
 2,625
Interest on loans receivable754
 754
 3,599
 2,250
Other, net3,268
 2,147
 9,045
 5,447
 $9,306
 $6,459
 $27,800
 $20,121
____________________
(1)This income is entirely offset by the expense resulting from the mark-to-market of the deferred compensation plan liability, which is included in "general and administrative" expense.

17.
16.    Interest and Debt Expense

The following table sets forth the details of interest and debt expense:
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Interest expense$89,081 $50,801 
Capitalized interest and debt expense(8,857)(3,520)
Amortization of deferred financing costs6,013 4,828 
$86,237 $52,109 
34
(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Interest expense$89,675
 $79,648
 $263,037
 $247,172
Amortization of deferred financing costs7,977
 7,906
 24,523
 24,372
Capitalized interest and debt expense(12,584) (7,833) (34,979) (21,510)
 $85,068
 $79,721
 $252,581
 $250,034



38

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

18.
(Loss) Income Per Share/(Loss) Income Per Class A Unit

17.    Income Per Share/Income Per Class A Unit
Vornado Realty Trust

The following table provides a reconciliation of both net (loss) income andpresents the number of common shares used in the computationcalculations of (i) basic (loss) income per common share - which includes the weighted average number of common shares outstanding without regard to dilutive potential common shares and (ii) diluted (loss) income per common share - which includes the weighted average common shares outstanding and dilutive share equivalents. DilutiveUnvested share-based payment awards that contain nonforfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated to participating securities, which include restricted stock awards, based on the two-class method. Our share-based payment awards, including employee stock options, restricted Operating Partnership units ("OP Units"), out-performance plan awards ("OPPs"), Appreciation-Only Long-Term Incentive Plan Units ("AO LTIP Units"), and LTPP Units, are included in the calculation of diluted income per share equivalents may includeusing the treasury stock method if dilutive. Our convertible securities, including our Series A convertible preferred shares, employee stock options, restricted stock awardsSeries G-1 through G-4 convertible preferred units and Out-Performance Plan awards.Series D-13 redeemable preferred units, are reflected in diluted income per share by application of the if-converted method if dilutive.
(Amounts in thousands, except per share amounts)(Amounts in thousands, except per share amounts)For the Three Months Ended September 30, For the Nine Months Ended September 30,(Amounts in thousands, except per share amounts)For the Three Months Ended March 31,
 2017 2016 2017 201620232022
Numerator:Numerator:       Numerator:
Income from continuing operations, net of income attributable to noncontrolling interests$32,050
 $69,037
 $196,684
 $337,339
(Loss) income from discontinued operations, net of income attributable to noncontrolling interests(44,948) 23,543
 (13,600) (97,732)
Net income attributable to VornadoNet income attributable to Vornado$20,697 $42,007 
Preferred share dividendsPreferred share dividends(15,529)(15,529)
Net income attributable to common shareholdersNet income attributable to common shareholders5,168 26,478 
Earnings allocated to unvested participating securitiesEarnings allocated to unvested participating securities(1)(5)
Net (loss) income attributable to Vornado(12,898) 92,580
 183,084
 239,607
Preferred share dividends(16,128) (19,047) (48,386) (59,774)
Numerator for basic and diluted income per shareNumerator for basic and diluted income per share$5,167 $26,473 
Denominator:Denominator:
Denominator for basic income per share - weighted average sharesDenominator for basic income per share - weighted average shares191,869 191,724 
Effect of dilutive securities(1):
Effect of dilutive securities(1):
Share-based payment awardsShare-based payment awards12 314 
Denominator for diluted income per share - weighted average shares and assumed conversionsDenominator for diluted income per share - weighted average shares and assumed conversions191,881 192,038 
INCOME PER COMMON SHARE - BASIC:INCOME PER COMMON SHARE - BASIC:
Preferred share issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
Net (loss) income attributable to common shareholders(29,026) 66,125
 134,698
 172,425
Net income per common shareNet income per common share$0.03 $0.14 
INCOME PER COMMON SHARE - DILUTED:INCOME PER COMMON SHARE - DILUTED:
Earnings allocated to unvested participating securities(9) (13) (37) (43)
Numerator for basic (loss) income per share(29,035) 66,112
 134,661
 172,382
Impact of assumed conversions:       
Earnings allocated to Out-Performance Plan units—
 —
 195
 96
Numerator for diluted (loss) income per share$(29,035) $66,112
 $134,856
 $172,478
        
Denominator:       
Denominator for basic (loss) income per share – weighted average shares189,593
 188,901
 189,401
 188,778
Effect of dilutive securities(1):
       
Employee stock options and restricted share awards1,254
 1,147
 1,553
 1,067
Out-Performance Plan units—
 —
 303
 241
Denominator for diluted (loss) income per share – weighted average shares and assumed conversions190,847
 190,048
 191,257
 190,086
        
(LOSS) INCOME PER COMMON SHARE – BASIC:       
Income from continuing operations, net$0.09
 $0.23
 $0.78
 $1.43
(Loss) income from discontinued operations, net(0.24) 0.12
 (0.07) (0.52)
Net (loss) income per common share$(0.15) $0.35
 $0.71
 $0.91
        
(LOSS) INCOME PER COMMON SHARE – DILUTED:       
Income from continuing operations, net$0.09
 $0.23
 $0.78
 $1.42
(Loss) income from discontinued operations, net(0.24) 0.12
 (0.07) (0.51)
Net (loss) income per common share$(0.15) $0.35
 $0.71
 $0.91
Net income per common shareNet income per common share$0.03 $0.14 
____________________
(1)The effect of dilutive securities for the three months ended September 30, 2017 and 2016 excludes an aggregate of 12,413 and 12,315 weighted average common share equivalents, respectively, and 12,173 and 12,072 weighted average common share equivalents for the nine months ended September 30, 2017 and 2016 respectively, as their effect was anti-dilutive.

(1)The effect of dilutive securities excluded an aggregate of 17,147 and 15,185 weighted average common share equivalents for the three months ended March 31, 2023 and 2022, respectively,as their effect was anti-dilutive.

35
39

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

18.(Loss)17.    Income Per Share/(Loss) Income Per Class A Unit - continued

Vornado Realty L.P.

The following table provides a reconciliation of both net (loss) income andpresents the number of Class A units used in the computationcalculations of (i) basic (loss) income per Class A unit - which includes the weighted average number of Class A units outstanding without regard to dilutive potential Class A units and (ii) diluted (loss) income per Class A unit - which includes the weighted average Class A units outstanding and dilutive Class A unit equivalents. DilutiveUnvested share-based payment awards that contain non-forfeitable rights to dividends, whether paid or unpaid, are accounted for as participating securities. Earnings are allocated to participating securities, which include Vornado restricted stock awards and our OP Units, based on the two-class method. Our other share-based payment awards, including Vornado stock options, OPPs, AO LTIP Units, and LTPP Units, are included in the calculation of diluted income per Class A unit equivalents may includeusing the treasury stock method if dilutive. Our convertible securities, including our Series A convertible preferred units, Vornado stock options, restrictedSeries G-1 through G-4 convertible preferred units and Series D-13 redeemable preferred units, are reflected in diluted income per Class A unit awards and Out-Performance Plan awards.by application of the if-converted method if dilutive.
(Amounts in thousands, except per unit amounts)(Amounts in thousands, except per unit amounts)For the Three Months Ended September 30, For the Nine Months Ended September 30,(Amounts in thousands, except per unit amounts)For the Three Months Ended March 31,
 2017 2016 2017 201620232022
Numerator:Numerator:       Numerator:
Income from continuing operations, net of income attributable to noncontrolling interests$33,154
 $71,866
 $206,642
 $355,221
(Loss) income from discontinued operations(47,930) 25,080
 (14,501) (104,204)
Net income attributable to Vornado Realty L.P.Net income attributable to Vornado Realty L.P.$21,126 $44,001 
Preferred unit distributionsPreferred unit distributions(15,558)(15,558)
Net income attributable to Class A unitholdersNet income attributable to Class A unitholders5,568 28,443 
Earnings allocated to unvested participating securitiesEarnings allocated to unvested participating securities(340)(639)
Net (loss) income attributable to Vornado Realty L.P.(14,776) 96,946
 192,141
 251,017
Preferred unit distributions(16,176) (19,096) (48,531) (59,920)
Numerator for basic and diluted income per Class A unitNumerator for basic and diluted income per Class A unit$5,228 $27,804 
Denominator:Denominator:
Denominator for basic income per Class A unit – weighted average unitsDenominator for basic income per Class A unit – weighted average units205,802 205,141 
Effect of dilutive securities(1):
Effect of dilutive securities(1):
Share-based payment awardsShare-based payment awards12 755 
Denominator for diluted income per Class A unit – weighted average units and assumed conversionsDenominator for diluted income per Class A unit – weighted average units and assumed conversions205,814 205,896 
INCOME PER CLASS A UNIT - BASIC:INCOME PER CLASS A UNIT - BASIC:
Preferred unit issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
Net (loss) income attributable to Class A unitholders(30,952) 70,442
 143,610
 183,689
Net income per Class A unitNet income per Class A unit$0.03 $0.14 
INCOME PER CLASS A UNIT - DILUTED:INCOME PER CLASS A UNIT - DILUTED:
Earnings allocated to unvested participating securities(740) (589) (2,499) (2,001)
Numerator for basic and diluted (loss) income per Class A unit$(31,692) $69,853
 $141,111
 $181,688
        
Denominator:       
Denominator for basic (loss) income per Class A unit – weighted average units201,300
 200,458
 201,093
 200,300
Effect of dilutive securities(1):
       
Vornado stock options and restricted unit awards1,813
 1,683
 2,218
 1,632
Denominator for diluted (loss) income per Class A unit – weighted average units and assumed conversions203,113
 202,141
 203,311
 201,932
        
(LOSS) INCOME PER CLASS A UNIT – BASIC:       
Income from continuing operations, net$0.08
 $0.22
 $0.77
 $1.43
(Loss) income from discontinued operations, net(0.24) 0.13
 (0.07) (0.52)
Net (loss) income per Class A unit$(0.16) $0.35
 $0.70
 $0.91
        
(LOSS) INCOME PER CLASS A UNIT – DILUTED:       
Income from continuing operations, net$0.08
 $0.22
 $0.76
 $1.42
(Loss) income from discontinued operations, net(0.24) 0.13
 (0.07) (0.52)
Net (loss) income per Class A unit$(0.16) $0.35
 $0.69
 $0.90
Net income per Class A unitNet income per Class A unit$0.03 $0.14 
____________________
(1)The effect of dilutive securities for the three months ended September 30, 2017 and 2016 excludes an aggregate of 147 and 222 weighted average Class A unit equivalents, respectively, and 118 and 226 weighted average Class A unit equivalents for the nine months ended September 30, 2017 and 2016 respectively, as their effect was anti-dilutive.

(1)The effect of dilutive securities excluded an aggregate of 3,214 and 1,327 weighted average Class A unit equivalents for the three months ended March 31, 2023 and 2022, respectively,as their effect was anti-dilutive.
36
19.

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
18.    Commitments and Contingencies

Insurance

WeFor our properties, we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $250,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake.earthquake, excluding communicable disease coverage. Our California properties have earthquake insurance with coverage of $180,000,000$350,000,000 per occurrence and in the annual aggregate, subject to a deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of $4.0$6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $2.0$5.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by the Terrorism Risk Insurance Program Reauthorization Act of 2015,2002, as amended to date and which expires inhas been extended through December 2020.2027.



40
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

19.Commitments and Contingencies - continued

Insurance - continued

Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism including NBCR acts. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third partythird-party insurance companies and the Federal government with no exposure to PPIC. For NBCR acts, PPIC is responsible for a deductible of $1,976,000$1,774,525 and 17%20% of the balance of a covered loss and the Federal government is responsible for the remaining portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.

Certain condominiums in which we own an interest (including the Farley Condominiums) maintain insurance policies with different per occurrence and aggregate limits than our policies described above.
We continue to monitor the state of the insurance market and the scope and costcosts of coverage for acts of terrorism.terrorism and other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future.

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

Other Commitments and Contingencies

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

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

In January 2022, we exercised a 25-year renewal option on our PENN 1 ground lease extending the term through June 2073. As a result of the exercise, we remeasured the related ground lease liability to include the 25-year extension option and recorded an estimated incremental right-of-use asset and lease liability of approximately $350,000,000 within "right-of-use assets" and "lease liabilities", respectively, on our consolidated balance sheets. The ground lease is subject to fair market value resets every 25 years over the lease term, with the next reset occurring in June 2023.
Generally,In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and the guaranty. On May 11, 2021, the court issued a final statement of decision in our favor and on January 31, 2023, the Court of Appeal affirmed the lower court's decision. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. In April 2023, we entered into a settlement with affiliates of the successor to Regus PLC, pursuant to which we agreed to discontinue all legal proceedings against the Regus PLC successor and its affiliates in exchange for a payment to us of $21,350,000, which will be recognized in our consolidated statements of income in the second quarter of 2023.
37

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)
18. Commitments and Contingencies - continued
Other Commitments and Contingencies - continued
Our mortgage loans are non-recourse to us. However, inus, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and 435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. In certain cases, we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of September 30, 2017,March 31, 2023, the aggregate dollar amount of these guarantees and master leases is approximately $676,000,000.

$1,026,000,000. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to Empire State Development (“ESD”), an entity of New York State, for the Farley Building. The aggregate dollar amount of the guarantee is $510,000,000 but the guarantee will be terminated if we surrender possession of the property to ESD or if we no longer hold a direct or indirect interest in the property.
As of September 30, 2017, $10,501,000March 31, 2023, $15,273,000 of letters of credit were outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest rate coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB.BBB- (our current ratings). Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

In September 2016, our 50.1%Our 95% consolidated joint venture (5% is owned by Related Companies ("Related")) developed and owns The Farley Building. In connection with Related was designated by ESD, an entitythe development of New York State to redevelopthe property, the joint venture admitted a historic tax credit investor partner. Under the terms of the historic Farley Post Office Building (see page 24). The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD,tax credit arrangement, the joint venture is obligatedrequired to buildcomply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may require a refund or reduction of the Moynihan Train Hall, withTax Credit Investor’s capital contributions. As of March 31, 2023, the Tax Credit Investor has made$92,400,000 in capital contributions. Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill allhave guaranteed certain of the joint venture’s obligations.obligations to the Tax Credit Investor.
As investment manager of the Fund we are entitled to an incentive allocation after the limited partners have received a preferred return on their invested capital. The obligationsincentive allocation is subject to catch-up and clawback provisions.Accordingly, based on the March 31, 2023 fair value of Skanska Moynihan Train Hall Buildersthe Fund assets, at liquidation we would be required to make a$26,200,000 payment to the limited partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have been bonded by Skanska USA and bears a full guaranty from Skanska AB.

no income statement impact as it was previously accrued.
As of September 30, 2017,March 31, 2023, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $45,000,000.

$10,300,000.
As of September 30, 2017,March 31, 2023, we have construction commitments aggregating approximately $489,000,000.$351,000,000.

19.    Segment Information
We operate in two reportable segments, New York and Other, which is based on how we manage our business.
Net operating income ("NOI") at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. As properties are bought and sold based on NOI at share - cash basis, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

38
41

VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.19.    Segment Information
As a result of the spin-off of our Washington, DC segment (see Note 7 - Dispositions), effective July 1, 2017, the Washington, DC segment has been reclassified to the Other segment. We have also reclassified the prior period segment financial results to conform to the current period presentation.continued

Below is a summary of net (loss) incomeNOI at share and a reconciliation of net (loss) income to EBITDA(1) and NOI(1) at share - cash basisby segment for the three months ended September 30, 2017.March 31, 2023 and 2022.
(Amounts in thousands)For the Three Months Ended March 31, 2023
TotalNew YorkOther
Total revenues$445,923 $363,814 $82,109 
Operating expenses(228,773)(188,321)(40,452)
NOI - consolidated217,150 175,493 41,657 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(11,764)(4,823)(6,941)
Add: NOI from partially owned entities68,097 65,324 2,773 
NOI at share273,483 235,994 37,489 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other5,052 5,033 19 
NOI at share - cash basis$278,535 $241,027 $37,508 
(Amounts in thousands)For the Three Months Ended September 30, 2017 
 Total New York Other 
Total revenues$528,755
 $453,609
 $75,146
 
Total expenses366,520
 284,976
 81,544
 
Operating income (loss)162,235
 168,633
 (6,398) 
(Loss) income from partially owned entities(41,801) 1,411
 (43,212) 
Loss from real estate fund investments(6,308) —
 (6,308) 
Interest and other investment income, net9,306
 1,413
 7,893
 
Interest and debt expense(85,068) (61,529) (23,539) 
Income (loss) before income taxes38,364
 109,928
 (71,564) 
Income tax expense(1,188) (1,087) (101) 
Income (loss) from continuing operations37,176
 108,841
 (71,665) 
Loss from discontinued operations(47,930) —
 (47,930) 
Net (loss) income(10,754) 108,841
 (119,595) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(4,022) (2,552) (1,470) 
Net (loss) income attributable to the Operating Partnership(14,776) 106,289
 (121,065) 
Interest and debt expense(2)
113,438
 84,907
 28,531
 
Depreciation and amortization(2)
136,621
 104,799
 31,822
 
Income tax expense (2)
1,462
 1,182
 280
 
EBITDA(1)
236,745
 297,177
(3) 
(60,432)
(4) 
Acquisition and transaction related costs, including $53,581 for the spin-off of JBGS53,642
 —
 53,642
 
Impairment loss on investment in PREIT44,465
 —
 44,465
 
General and administrative expenses less $1,975 mark-to-market of our deferred compensation plan35,495
 9,479
 26,016
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(23,304) (21,435) (1,869) 
Our share of net realized/unrealized losses from our real estate fund investments10,394
 —
 10,394
 
Net gain resulting from UE operating partnership unit issuances(5,200) —
 (5,200) 
Real estate impairment losses(2)
4,354
 —
 4,354
 
Net gains on sale of real estate and other(2)
(1,547) —
 (1,547) 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(12,207) (12,207) —
 
Dividends received from Alexander's7,030
 7,030
 —
 
Our share of PREIT EBITDA(3,731) —
 (3,731) 
Distributions received from PREIT1,361
 —
 1,361
 
Our share of UE EBITDA (excluding management fees)(2,513) —
 (2,513) 
Distributions received from UE1,257
 —
 1,257
 
NOI(1)
$346,241
 $280,044
(3) 
$66,197
(4) 
(Amounts in thousands)For the Three Months Ended March 31, 2022
TotalNew YorkOther
Total revenues$442,130 $358,548 $83,582 
Operating expenses(216,529)(177,535)(38,994)
NOI - consolidated225,601 181,013 44,588 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(20,035)(13,310)(6,725)
Add: NOI from partially owned entities78,692 75,964 2,728 
NOI at share284,258 243,667 40,591 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other(3,130)(3,975)845 
NOI at share - cash basis$281,128 $239,692 $41,436 
____________________
See notes on pages 46 through 48.


42
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Below is a summary of net income and a reconciliation of netincome to EBITDA(1) NOI at share and NOI(1) by segment at share - cash basis for the three months ended September 30, 2016.March 31, 2023 and 2022.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Net income$11,198 $53,375 
Depreciation and amortization expense106,565 117,443 
General and administrative expense41,595 41,216 
Transaction related costs and other658 1,005 
Income from partially owned entities(16,666)(33,714)
Loss (income) from real estate fund investments19 (5,674)
Interest and other investment income, net(9,603)(1,018)
Interest and debt expense86,237 52,109 
Net gains on disposition of wholly owned and partially owned assets(7,520)(6,552)
Income tax expense4,667 7,411 
NOI from partially owned entities68,097 78,692 
NOI attributable to noncontrolling interests in consolidated subsidiaries(11,764)(20,035)
NOI at share273,483 284,258 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other5,052 (3,130)
NOI at share - cash basis$278,535 $281,128 
39
(Amounts in thousands)For the Three Months Ended September 30, 2016 
 Total New York Other 
Total revenues$502,753
 $432,869
 $69,884
 
Total expenses354,292
 280,689
 73,603
 
Operating income (loss)148,461
 152,180
 (3,719) 
Income (loss) from partially owned entities3,811
 (579) 4,390
 
Income from real estate fund investments1,077
 —
 1,077
 
Interest and other investment income, net6,459
 1,355
 5,104
 
Interest and debt expense(79,721) (51,212) (28,509) 
Income (loss) before income taxes80,087
 101,744
 (21,657) 
Income tax expense(4,563) (2,356) (2,207) 
Income (loss) from continuing operations75,524
 99,388
 (23,864) 
Income from discontinued operations25,080
 —
 25,080
 
Net income100,604
 99,388
 1,216
 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(3,658) (2,985) (673) 
Net income attributable to the Operating Partnership96,946
 96,403
 543
 
Interest and debt expense(2)
122,979
 66,314
 56,665
 
Depreciation and amortization(2)
172,980
 111,731
 61,249
 
Income tax expense(2)
5,102
 2,445
 2,657
 
EBITDA(1)
398,007
 276,893
(3) 
121,114
(4) 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(46,500) (35,199) (11,301) 
General and administrative expenses less $204 mark-to-market of our deferred compensation plan40,238
 9,783
 30,455
 
Net gains on sale of real estate and other(2)
(5,386) —
 (5,386) 
Acquisition and transaction related costs, including $2,739 for the spin-off of JBGS3,808
 —
 3,808
 
Real estate impairment losses(2)
1,599
 —
 1,599
 
Our share of net realized/unrealized losses from our real estate fund investments99
 —
 99
 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(11,506) (11,506) —
 
Dividends received from Alexander's6,617
 6,617
 —
 
Our share of PREIT EBITDA(3,070) —
 (3,070) 
Distributions received from PREIT1,342
 —
 1,342
 
Our share of UE EBITDA (excluding management fees)(2,514) —
 (2,514) 
Distributions received from UE1,143
 —
 1,143
 
NOI(1)
$383,877
 $246,588
(3) 
$137,289
(4) 
____________________
See notes on pages 46 through 48.


43
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Below is a summary of net income (loss) and a reconciliation of net income (loss) to EBITDA(1) and NOI(1) by segment for the nine months ended September 30, 2017.
(Amounts in thousands)For the Nine Months Ended September 30, 2017 
 Total New York Other 
Total revenues$1,547,900
 $1,316,710
 $231,190
 
Total expenses1,100,042
 845,632
 254,410
 
Operating income (loss)447,858
 471,078
 (23,220) 
Income (loss) from partially owned entities5,578
 (954) 6,532
 
Loss from real estate fund investments(1,649) —
 (1,649) 
Interest and other investment income, net27,800
 4,384
 23,416
 
Interest and debt expense(252,581) (179,851) (72,730) 
Net gain on disposition of wholly owned and partially owned assets501
 —
 501
 
Income (loss) before income taxes227,507
 294,657
 (67,150) 
Income tax expense(2,429) (324) (2,105) 
Income (loss) from continuing operations225,078
 294,333
 (69,255) 
Loss from discontinued operations(14,501) —
 (14,501) 
Net income (loss)210,577
 294,333
 (83,756) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(18,436) (8,041) (10,395) 
Net income (loss) attributable to the Operating Partnership192,141
 286,292
 (94,151) 
Interest and debt expense(2)
348,350
 239,032
 109,318
 
Depreciation and amortization(2)
476,406
 328,058
 148,348
 
Income tax expense(2)
4,180
 540
 3,640
 
EBITDA(1)
1,021,077
 853,922
(3) 
167,155
(4) 
General and administrative expenses less $5,233 mark-to-market of our deferred compensation plan131,365
 31,630
 99,735
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(73,125) (58,797) (14,328) 
Acquisition and transaction related costs, including $67,045 for the spin-off of JBGS68,118
 —
 68,118
 
Impairment loss on investment in PREIT44,465
 —
 44,465
 
Net gains on sale of real estate and other(2)
(21,507) —
 (21,507) 
Net gains resulting from UE operating partnership unit issuances(21,100) —
 (21,100) 
Our share of net realized/unrealized losses from our real estate fund investments18,802
 —
 18,802
 
Net gain on repayment of our Suffolk Downs JV debt investments(11,373) —
 (11,373) 
Real estate impairment losses(2)
7,572
 —
 7,572
 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(35,511) (35,511) —
 
Dividends received from Alexander's21,090
 21,090
 —
 
Our share of PREIT EBITDA(15,439) —
 (15,439) 
Distributions received from PREIT3,929
 —
 3,929
 
Our share of UE EBITDA (excluding management fees)(9,694) —
 (9,694) 
Distributions received from UE3,773
 —
 3,773
 
NOI(1)
$1,132,442
 $812,334
(3) 
$320,108
(4) 
____________________
See notes on pages 46 through 48.



44
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Below is a summary of net income (loss) and a reconciliation of net income (loss) to EBITDA(1) and NOI(1) by segment for the nine months ended September 30, 2016.
(Amounts in thousands)For the Nine Months Ended September 30, 2016 
 Total New York Other 
Total revenues$1,489,768
 $1,269,464
 $220,304
 
Total expenses1,062,219
 818,419
 243,800
 
Operating income (loss)427,549
 451,045
 (23,496) 
Income (loss) from partially owned entities3,892
 (5,143) 9,035
 
Income from real estate fund investments28,750
 —
 28,750
 
Interest and other investment income, net20,121
 3,684
 16,437
 
Interest and debt expense(250,034) (162,193) (87,841) 
Net gains on disposition of wholly owned and partially owned assets160,225
 159,511
 714
 
Income (loss) before income taxes390,503
 446,904
 (56,401) 
Income tax expense(8,921) (4,131) (4,790) 
Income (loss) from continuing operations381,582
 442,773
 (61,191) 
Loss from discontinued operations(104,204) —
 (104,204) 
Net income (loss)277,378
 442,773
 (165,395) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(26,361) (9,811) (16,550) 
Net income (loss) attributable to the Operating Partnership251,017
 432,962
 (181,945) 
Interest and debt expense(2)
376,898
 208,683
 168,215
 
Depreciation and amortization(2)
521,143
 331,448
 189,695
 
Income tax expense(2)
13,067
 4,424
 8,643
 
EBITDA(1)
1,162,125
 977,517
(3) 
184,608
(4) 
Net gains on sale of real estate and other(2)
(168,140) (159,511) (8,629) 
Real estate impairment losses(2)
166,701
 —
 166,701
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(152,023) (114,217) (37,806) 
General and administrative expenses less $2,625 mark-to-market of our deferred compensation plan132,085
 27,557
 104,528
 
Acquisition and transaction related costs, including $4,597 for the spin-off of JBGS11,319
 —
 11,319
 
Our share of net realized/unrealized gains from our real estate fund investments(8,741) —
 (8,741) 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(34,880) (34,880) —
 
Dividends received from Alexander's19,849
 19,849
 —
 
Our share of PREIT EBITDA(8,537) —
 (8,537) 
Distributions received from PREIT3,906
 —
 3,906
 
Our share of UE EBITDA (excluding management fees)(7,539) —
 (7,539) 
Distributions received from UE3,430
 —
 3,430
 
NOI(1)
$1,119,555
 $716,315
(3) 
$403,240
(4) 
____________________
See notes on the following pages.




45
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Notes to preceding tabular information:

(1)
EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization."  NOI represents "Net Operating Income" on a cash basis. We calculate EBITDA and NOI on an Operating Partnership basis which is before allocation to the noncontrolling interest of the Operating Partnership.  We consider EBITDA the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. We also consider NOI a key non-GAAP financial measure. NOI is before general and administrative expenses, straight-line rental income and expense, amortization of acquired below and above market leases, net, acquisition and transaction related costs, our share of net realized and unrealized gains or losses from our real estate fund investments, impairment losses and gains on disposal of assets. As properties are bought and sold based on a multiple of NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to those of our peers. EBITDA and NOI should not be considered substitutes for net income. EBITDA and NOI may not be comparable to similarly titled measures employed by other companies.

Our 7.5% interest in Fashion Centre Mall/Washington Tower and our interest in Rosslyn Plaza (ranging from 43.7% to 50.4%) were not included in the spin-off of our Washington, DC segment and have been reclassified to Other. The prior year's presentation has been conformed to the current year.  In addition, on January 1, 2017, we reclassified our investment in 85 Tenth Avenue from Other to the New York segment as a result of the December 1, 2016 repayment of our loans receivable and the receipt of a 49.9% ownership interest in the property. 

(2)
Adjustments include our proportionate share of partially owned entities and give effect to noncontrolling interest's share of consolidated subsidiaries.



46
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Notes to preceding tabular information - continued:

(3)The elements of "New York" EBITDA are summarized below.
  (Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30, 
   2017 2016 2017 2016 
  Office$183,162
 $164,150
(a) 
$522,566
 $484,735
(a) 
  Retail90,316
 91,061
(a) 
269,762
 272,083
(a) 
  Residential5,981
 6,214
 18,450
 18,901
 
  Alexander's12,207
 11,506
 35,511
 34,880
 
  Hotel Pennsylvania5,511
 3,962
 7,633
 4,287
 
  Total New York EBITDA, as adjusted297,177
 276,893
 853,922
 814,886
 
  Certain items that impact EBITDA:        
  Net gain on sale of 47% ownership interest in 7 West 34th Street—
 —
 —
 159,511
 
  EBITDA from sold properties—
 —
 —
 3,120
 
  Total of certain items that impact EBITDA—
 —
 —
 162,631
 
  Total New York EBITDA$297,177
 $276,893
 $853,922
 $977,517
 

The elements of "New York" NOI are summarized below.
  (Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30, 
   2017 2016 2017 2016 
  Office$179,505
 $157,643
(a) 
$523,531
 $459,509
(a) 
  Retail81,839
 72,178
(a) 
241,667
 211,611
(a) 
  Residential5,418
 5,525
 16,300
 16,724
 
  Alexander's7,030
 6,617
 21,090
 19,849
 
  Hotel Pennsylvania6,252
 4,625
 9,746
 6,390
 
  Total New York NOI, as adjusted280,044
 246,588
 812,334
 714,083
 
  NOI from sold properties—
 —
 —
 2,232
 
  Total New York NOI$280,044
 $246,588
 $812,334
 $716,315
 
_____________________
(a)Beginning in January 2017 for office buildings with retail at the base, we have adjusted the allocation of real estate taxes between the retail and office elements above. This has no effect on our consolidated financial statements but resulted in a reallocation of $4,213 and $12,058 of income from retail to office for the three and nine months ended September 30, 2016, respectively.






47
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

20.Segment Information - continued
Notes to preceding tabular information - continued:

(4)The elements of "Other" EBITDA are summarized below.
  (Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
   2017 2016 2017 2016
  theMART (including trade shows)$24,165
 $21,696
 $72,471
 $70,689
  555 California Street11,643
 11,405
 35,870
 35,137
  Other investments11,379
 20,388
 36,318
 57,092
  
Corporate general and administrative expenses(a)
(22,730) (21,519) (78,952) (76,364)
  
Investment income and other, net(a)
5,910
 6,871
 24,079
 19,317
  Other EBITDA, as adjusted30,367
 38,841
 89,786
 105,871
  Certain items that impact EBITDA:       
  JBGS which is treated as a discontinued operation:       
  Transaction costs(53,581) (2,739) (67,045) (4,597)
  Operating results through July 17, 2017 spin-off13,038
 75,307
 153,449
 214,604
   (40,543) 72,568
 86,404
 210,007
  Impairment loss on investment in PREIT(44,465) —
 (44,465) —
  (Loss) income from real estate fund investments, net(7,794) 807
 (11,333) 13,662
  Net gain resulting from UE operating partnership unit issuances5,200
 —
 21,100
 —
  Our share of net gain on sale of Suffolk Downs—
 —
 15,314
 —
  Net gain on repayment of Suffolk Downs JV debt investments—
 —
 11,373
 —
  Skyline properties impairment loss—
 —
 —
 (160,700)
  Other(3,197) 8,898
 (1,024) 15,768
  Total of certain items that impact EBITDA(90,799) 82,273
 77,369
 78,737
  Other EBITDA$(60,432) $121,114
 $167,155
 $184,608

The elements of "Other" NOI are summarized below.
  (Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
   2017 2016 2017 2016
  theMART (including trade shows)$25,422
 $21,758
 $74,859
 $70,914
  555 California Street11,013
 9,899
 33,647
 24,010
  Other investments7,589
 21,381
 15,138
 44,482
  
Investment income and other, net(a)
5,910
 6,871
 24,079
 19,317
  Other NOI, as adjusted49,934
 59,909
 147,723
 158,723
  Certain items that impact NOI:       
  JBGS operating results through July 17, 2017 spin-off12,971
 72,919
 160,634
 233,310
  Our share of real estate fund investments2,600
 2,555
 7,469
 6,313
  Other692
 1,906
 4,282
 4,894
  Total of certain items that impact NOI16,263
 77,380
 172,385
 244,517
  Other NOI$66,197
 $137,289
 $320,108
 $403,240
_____________________
(a)The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $1,975 and $204 of income for the three months ended September 30, 2017 and 2016, respectively, and $5,233 and $2,625 of income for the nine months ended September 30, 2017 and 2016, respectively.



48
VORNADO REALTY TRUST AND VORNADO REALTY L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(UNAUDITED)

21.
Subsequent Event

On October 17, 2017, we extended one of our two $1.25 billion unsecured revolving credit facilities from November 2019 to January 2022 with two six-month extension options. The interest rate on the extended facility was lowered from LIBOR plus 1.05% to LIBOR plus 1.00%. The facility fee remains at 20 basis points. The interest rate and facility fees are the same as our other $1.25 billion unsecured revolving credit facility, which matures in February 2021 with two six-month extension options.


49


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Shareholders and the Board of Trustees
of Vornado Realty Trust
New York, New York

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Vornado Realty Trust and subsidiaries (the “Company”"Company") as of September 30, 2017, andMarch 31, 2023, the related consolidated statements of income, and comprehensive income, for the three-month and nine-month periods ended September 30, 2017 and 2016 and changes in equity, and cash flows for the nine-monththree-month periods ended September 30, 2017March 31, 2023 and 2016. These2022, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements areinformation for it to be in conformity with accounting principles generally accepted in the responsibilityUnited States of the Company’s management.America.


We conducted our reviewshave previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and in our report dated February 13, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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


/s/ DELOITTE & TOUCHE LLP

New York, New York
May 1, 2023
40



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Vornado Realty L.P.

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheet of Vornado Realty L.P. and subsidiaries (the "Partnership") as of March 31, 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to such consolidatedthe accompanying interim financial statementsinformation for themit to be in conformity with accounting principles generally accepted in the United States of America.


We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Vornado Realty Trustthe Partnership as of December 31, 2016,2022, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended prior to the reclassification for the discontinued operations described in Note 7 to the accompanying financial statements (not presented herein); and in our report dated February 13, 2017,2023, we expressed an unqualified opinion on those consolidated financial statements. We also audited the adjustments described in Note 7 that were applied to reclassify the December 31, 2016 consolidated balance sheet of Vornado Realty Trust (not presented herein) for discontinued operations.statements. In our opinion, such adjustments are appropriate and have been properly applied to the previously issued consolidated balance sheetinformation set forth in deriving the accompanying retrospectively adjusted consolidated balance sheet as of December 31, 2016.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
October 30, 2017



50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Partners
Vornado Realty L.P.
New York, New York

We have reviewed2022, is fairly stated, in all material respects, in relation to the accompanying consolidated balance sheet of Vornado Realty L.P. and consolidated subsidiaries (the “Partnership”) as of September 30, 2017, and the related consolidated statements of income and comprehensive incomefrom which it has been derived.

Basis for the three-month and nine-month periods ended September 30, 2017 and 2016 and changes in equity, and cash flows for the nine-month periods ended September 30, 2017 and 2016. TheseReview Results

This interim financial statements areinformation is the responsibility of the Partnership’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


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

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Vornado Realty L.P. as of December 31, 2016, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended prior to the reclassification for the discontinued operations described in Note 7 to the accompanying financial statements (not presented herein); and in our report dated February 13, 2017, we expressed an unqualified opinion on those consolidated financial statements. We also audited the adjustments described in Note 7 that were applied to reclassify the December 31, 2016 consolidated balance sheet of Vornado Realty L.P. and subsidiaries (not presented herein) for discontinued operations. In our opinion, such adjustments are appropriate and have been properly applied to the previously issued consolidated balance sheet in deriving the accompanying retrospectively adjusted consolidated balance sheet as of December 31, 2016.


/s/ DELOITTE & TOUCHE LLP


Parsippany, New JerseyYork, New York
October 30, 2017

May 1, 2023

41
51


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

Certain statements contained in this Quarterly Report constitute forward‑lookingforward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Quarterly Report on Form 10‑Q. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions.distributions, including the form of any 2023 dividend payments, and the amount and form of potential share repurchases and/or asset sales. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item"Item 1A. Risk Factors”Factors" in Part I of our Annual Report on Form 10-K as amended, for the year ended December 31, 2016.  2022.
Currently, some of the factors are the increase in interest rates and inflation and the continuing effects of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect that these factors have had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general.
For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and nine months ended September 30, 2017.March 31, 2023. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and nine months ended September 30, 2017March 31, 2023 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified in order to conform to the current year presentation.

42


52


Overview

Vornado Realty Trust (“Vornado”) is a fully integratedfully-integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P. (the “Operating Partnership”), a Delaware limited partnership (the “Operating Partnership”).partnership. Vornado is the sole general partner of and owned approximately 93.5%91.4% of the common limited partnership interest in the Operating Partnership as of September 30, 2017.March 31, 2023. All references to the “Company,” “we,” “us,”“us” and “our” mean, collectively, Vornado, the Operating Partnership and those entities/subsidiaries consolidated by Vornado.

On July 17, 2017, we completed the spin-off of our Washington, DC segment comprised of (i) 37 office properties totaling over 11.1 million square feet, five multifamily properties with 3,133 units and five other assets totaling approximately 406,000 square feet and (ii) 18 future development assets totaling over 10.4 million square feet of estimated potential development density, and (iii) $412.5 million of cash ($275.0 million plus The Bartlett financing proceeds less transaction costs and other mortgage items) to JBG SMITH Properties (“JBGS”). On July 18, 2017, JBGS was combined with the management business and certain Washington, DC assets of The JBG Companies (“JBG”), a Washington, DC real estate company. Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, is the Chairman of the Board of Trustees of JBGS. Mitchell Schear, former President of our Washington, DC business, is a member of the Board of Trustees of JBGS. We are providing transition services to JBGS initially including information technology, financial reporting and payroll services. The spin-off was effected through a tax-free distribution by Vornado to the holders of Vornado common shares of all of the common shares of JBGS at the rate of one JBGS common share for every two common shares of Vornado and the distribution by the Operating Partnership to the holders of its common units of all of the outstanding common units of JBG SMITH Properties LP (“JBGSLP”) at the rate of one JBGSLP common unit for every two common units of VRLP held of record. See JBGS’ Amendment No. 3 on Form 10 (File No. 1-37994) filed with the Securities and Exchange Commission on June 9, 2017 for additional information. Beginning in the third quarter of 2017, the historical financial results of our Washington, DC segment are reflected in our consolidated financial statements as discontinued operations for all periods presented.

Business Objective and Operating Strategy
Our business objective is to maximize Vornado shareholder value, which we measure by the total return provided to Vornado’s shareholders. Below is a table comparing Vornado’s performance to the FTSE NAREIT Office Index (“Office REIT”) and the MSCI US REIT Index (“MSCI”) for the following periods ended September 30, 2017:
   
Total Return(1)
 
   Vornado Office REIT MSCI 
 Three-month 2.3 % (0.7)% 0.9% 
 Nine-month (6.7)% 1.9 % 3.6% 
 One-year (3.1)% 2.5 % 0.5% 
 Three-year 14.0 % 30.3 % 31.9% 
 Five-year 52.0 % 53.7 % 58.0% 
 Ten-year 38.9 % 47.0 % 75.6% 
____________________
(1)Past performance is not necessarily indicative of future performance.




53

Overview - continued

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

maintaining a superior team of operating and investment professionals and an entrepreneurial spirit
investing in properties in select markets, such as New York City, where we believe there is a high likelihood of capital appreciation
acquiring quality properties at a discount to replacement cost and where there is a significant potential for higher rents
investing in retail properties in select under-stored locations such as the New York City metropolitan area
developing and redeveloping existing properties to increase returns and maximize value
investing in operating companies that have a significant real estate component

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

We compete with a large number of real estate investors, property owners and developers, some of whichwhom may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See “Item 1A. Risk“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K as amended, for the year ended December 31, 2016,2022 for additional information regarding these factors.

Our business has been, and may continue to be, affected by the increase in interest rates and inflation and the continuing effect of the COVID-19 pandemic and other uncertainties including the potential for an economic downturn. These factors could have a material impact on our business, financial condition, results of operations and cash flows.
Vornado Realty Trust

Quarter Ended September 30, 2017March 31, 2023 Financial Results Summary

Net lossincome attributable to common shareholders for the quarter ended September 30, 2017March 31, 2023 was $29,026,000,$5,168,000, or $0.15$0.03 per diluted share, compared to net income attributable to common shareholders of $66,125,000,$26,478,000, or $0.35$0.14 per diluted share, for the prior year’s quarter. The quarters ended September 30, 2017March 31, 2023 and 20162022 include certain items that impact the comparability of period-to-period net (loss) income attributable to common shareholders, which are listed in the table on the following page.below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased net loss attributable to common shareholders for the quarter ended September 30, 2017 by $97,255,000, or $0.51 per diluted share, and increased net income attributable to common shareholders for the quarter ended September 30, 2016March 31, 2023 by $18,115,000,$2,795,000, or $0.10$0.02 per diluted share.share, anddecreased net income attributable to common shareholders by $5,204,000, or $0.02 per diluted share, for the quarter ended March 31, 2022.

Funds From Operationsfrom operations (“FFO”) attributable to common shareholders plus assumed conversions (“FFO”) for the quarter ended September 30, 2017March 31, 2023 was $100,178,000,$119,083,000, or $0.52$0.61 per diluted share, compared to $225,529,000,$154,908,000, or $1.19$0.80 per diluted share, for the prior year’s quarter. FFO attributable to common shareholders plus assumed conversions for the quarters ended September 30, 2017March 31, 2023 and 20162022 include certain items that impact the comparability of period-to-period FFO, which are listed in the table on the following page.  The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased FFO for the quarter ended September 30, 2017 by $88,811,000, or $0.47 per diluted share, and increased FFO for the quarter ended September 30, 2016 by $49,310,000, or $0.26 per diluted share.

Nine Months Ended September 30, 2017 Financial Results Summary

Net income attributable to common shareholders for the nine months ended September 30, 2017 was $134,698,000, or $0.71 per diluted share, compared to $172,425,000, or $0.91 per diluted share, for the nine months ended September 30, 2016. The nine months ended September 30, 2017 and 2016 include certain items that impact net income attributable to common shareholders, which are listed in the table on the following page.  The aggregate of these items, net of amounts attributable to noncontrolling interests, decreased net income attributable to common shareholders for the nine months ended September 30, 2017 by $30,740,000, or $0.16 per diluted share, and increased net income attributable to common shareholders for the nine months ended September 30, 2016 by $53,053,000, or $0.28 per diluted share.

FFO for the nine months ended September 30, 2017 was $564,431,000, or $2.95 per diluted share, compared to $658,880,000, or $3.47 per diluted share, for the nine months ended September 30, 2016.  FFO for the nine months ended September 30, 2017 and 2016 include certain items that impact FFO, which are listed in the table on the following page.below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO attributable to common shareholders plus assumed conversions for the nine monthsquarter ended September 30, 2017 and 2016March 31, 2023 by $27,086,000,$2,795,000, or $0.14$0.01 per diluted share, and $159,791,000,increased FFO attributable to common shareholders plus assumed conversions by $2,595,000, or $0.84$0.01 per diluted share, respectively.for the quarter ended March 31, 2022.

The following table reconciles the difference between our net income attributable to common shareholders and our net income attributable to common shareholders, as adjusted:
(Amounts in thousands)For the Three Months Ended March 31,
 20232022
Certain (income) expense items that impact net income attributable to common shareholders:
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units$(6,173)$(5,412)
Deferred tax liability on our investment in The Farley Building (held through a taxable REIT subsidiary)2,875 3,173 
Other288 7,829 
(3,010)5,590 
Noncontrolling interests' share of above adjustments215 (386)
Total of certain (income) expense items that impact net income attributable to common shareholders$(2,795)$5,204 
The following table reconciles the difference between our FFO attributable to common shareholders plus assumed conversions and our FFO attributable to common shareholders plus assumed conversions, as adjusted:
(Amounts in thousands)For the Three Months Ended March 31,
 20232022
Certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions:
After-tax net gain on sale of 220 CPS condominium units$(6,173)$(5,412)
Deferred tax liability on our investment in The Farley Building (held through a taxable REIT subsidiary)2,875 3,173 
Other288 (549)
(3,010)(2,788)
Noncontrolling interests' share of above adjustments215 193 
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(2,795)$(2,595)


43
54


Overview - continued


(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Certain items that impact net (loss) income attributable to common shareholders:       
JBG SMITH Properties which is treated as a discontinued operation:       
Transaction costs$(53,581) $(2,739) $(67,045) $(4,597)
Operating results through July 17, 2017 spin-off3,950

29,489
 47,752
 66,714
 (49,631) 26,750
 (19,293) 62,117
        
Impairment loss on investment in Pennsylvania REIT(44,465) —
 (44,465) —
(Loss) income from real estate fund investments, net(7,794) 807
 (11,333) 13,662
Net gain resulting from Urban Edge Properties operating partnership unit issuances5,200
 —
 21,100
 —
Our share of write-off of deferred financing costs(3,819) —
 (3,819) —
Preferred share issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
Our share of net gain on sale of Suffolk Downs—
 —
 15,314
 —
Net gain on repayment of Suffolk Downs JV debt investments—
 —
 11,373
 —
Skyline properties impairment loss—
 —
 —
 (160,700)
Net gain on sale of 47% ownership interest in 7 West 34th Street—
 —
 —
 159,511
Other(3,197) (851) (1,024) (10,699)
 (103,706) 19,298
 (32,147) 56,483
Noncontrolling interests' share of above adjustments6,451
 (1,183) 1,407
 (3,430)
Total of certain items that impact net (loss) income attributable to common shareholders, net$(97,255) $18,115
 $(30,740) $53,053
Certain items that impact FFO:       
JBG SMITH Properties which is treated as a discontinued operation:       
Transaction costs$(53,581) $(2,739) $(67,045) $(4,597)
Operating results through July 17, 2017 spin-off10,148
 61,699
 122,201
 169,141
 (43,433) 58,960
 55,156
 164,544
        
Impairment loss on investment in Pennsylvania REIT(44,465) —
 (44,465) —
(Loss) income from real estate fund investments, net(7,794) 807
 (11,333) 13,662
Net gain resulting from Urban Edge Properties operating partnership unit issuances5,200
 —
 21,100
 —
Our share of write-off of deferred financing costs(3,819) —
 (3,819) —
Preferred share issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
Net gain on repayment of our Suffolk Downs JV debt investments—
 —
 11,373
 —
Other(390) 171
 856
 (130)
 (94,701) 52,530
 28,868
 170,668
Noncontrolling interests' share of above adjustments5,890
 (3,220) (1,782) (10,877)
Total of certain items that impact FFO, net$(88,811) $49,310
 $27,086
 $159,791



55

Overview - continued

Vornado Realty L.P.

Quarter Ended September 30, 2017 Financial Results Summary

Net loss attributable to Class A unitholders for the quarter ended September 30, 2017 was $30,952,000, or $0.16 per diluted Class A unit, compared to net income attributable to Class A unitholders of $70,442,000, or $0.35 per diluted Class A unit, for the prior year’s quarter.  The quarters ended September 30, 2017 and 2016 include certain items that impact net (loss) income attributable to Class A unitholders, which are listed in the table below.  The aggregate of these items increased net loss attributable to Class A unitholders for the quarter ended September 30, 2017 by $103,706,000, or $0.51 per diluted Class A unit, and increased net income attributable to Class A unitholders for the quarter ended September 30, 2016 by $19,298,000, or $0.10 per diluted Class A unit.

Nine Months Ended September 30, 2017 Financial Results Summary

Net income attributable to Class A unitholders for the nine months ended September 30, 2017 was $143,610,000, or $0.69 per diluted Class A unit, compared to $183,689,000, or $0.90 per diluted Class A unit, for the nine months ended September 30, 2016.  The nine months ended September 30, 2017 and 2016 include certain items that impact net income attributable to Class A unitholders, which are listed in the table below.  The aggregate of these items decreased net income attributable to Class A unitholders for the nine months ended September 30, 2017 by $32,147,000, or $0.16 per diluted Class A unit, and increased net income attributable to Class A unitholders for the nine months ended September 30, 2016 by $56,483,000, or $0.28 per diluted Class A unit.

(Amounts in thousands)For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2017 2016 2017 2016
Certain items that impact net (loss) income attributable to Class A unitholders:       
JBG SMITH Properties which is treated as a discontinued operation:       
Transaction costs$(53,581) $(2,739) $(67,045) $(4,597)
Operating results through July 17, 2017 spin-off3,950
 29,489
 47,752
 66,714
 (49,631) 26,750
 (19,293) 62,117
        
Impairment loss on investment in Pennsylvania REIT(44,465) —
 (44,465) —
(Loss) income from real estate fund investments, net(7,794) 807
 (11,333) 13,662
Net gain resulting from Urban Edge Properties operating partnership unit issuances5,200
 —
 21,100
 —
Our share of write-off of deferred financing costs(3,819) —
 (3,819) —
Preferred unit issuance costs (Series J redemption)—
 (7,408) —
 (7,408)
Our share of net gain on sale of Suffolk Downs—
 —
 15,314
 —
Net gain on repayment of Suffolk Downs JV debt investments—
 —
 11,373
 —
Skyline properties impairment loss—
 —
 —
 (160,700)
Net gain on sale of 47% ownership interest in 7 West 34th Street—
 —
 —
 159,511
Other(3,197) (851) (1,024) (10,699)
Total of certain items that impact net (loss) income attributable to Class A unitholders$(103,706) $19,298
 $(32,147) $56,483


56

Overview - continued

Vornado Realty Trust and Vornado Realty L.P.

Same Store EBITDA and Same Store NOI

Net Operating Income (“NOI”) At Share
The percentage increase (decrease) in same store Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)NOI at share and same store Net Operating Income (“NOI”) on aNOI at share - cash basis of our New York segment, and theMARTTHE MART and 555 California Street which are included in Other, are summarized below.
Three months ended March 31, 2023 compared to March 31, 2022TotalNew YorkTHE MART555 California Street
Same store NOI at share % increase (decrease)0.0 %1.6 %(22.6)%4.3 %
Same store NOI at share - cash basis % increase (decrease)1.5 %3.8 %(28.2)%8.3 %
  New York theMART 555 California Street
Same store EBITDA % increase (decrease) :     
 Three months ended September 30, 2017 compared to September 30, 20165.0%
(1) 
11.3 % 1.7 %
 Nine months ended September 30, 2017 compared to September 30, 20162.7%
(1) 
3.4 %
(2) 
(0.2)%
 Three months ended September 30, 2017 compared to June 30, 20174.8%
(1) 
(1.1)% (4.1)%
Same store NOI % increase (decrease):     
 Three months ended September 30, 2017 compared to September 30, 201613.8%
(1) 
17.0 % 13.2 %
 Nine months ended September 30, 2017 compared to September 30, 201613.2%
(1) 
5.8 %
(2) 
37.9 %
 Three months ended September 30, 2017 compared to June 30, 20173.9%
(1) 
1.6 % (2.2)%
       
____________________
   EBITDA  NOI
 (1)Excluding Hotel Pennsylvania - same store % increase:   
  Three months ended September 30, 2017 compared to September 30, 20164.5% 13.4%
  Nine months ended September 30, 2017 compared to September 30, 20162.3% 12.8%
  Three months ended September 30, 2017 compared to June 30, 20175.3% 4.4%
      
 (2)The nine months ended September 30, 2017 includes a $2,000,000 reversal of an expense accrued in 2015. Excluding this amount, same store EBITDA increased by 6.2% and same store NOI increased by 8.9%.


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


Dividends/Share Repurchase Program
On April 26, 2023, Vornado announced that it will postpone dividends on its common shares until the end of 2023, at which time, upon finalization of its 2023 taxable income, including the impact of asset sales, it will pay the 2023 dividend in either (i) cash, or (ii) a combination of cash and securities, as determined by its Board of Trustees.
Vornado also announced that its Board of Trustees has authorized the repurchase of up to $200,000,000 of its outstanding common shares under a newly established share repurchase program. Cash retained from dividends or from asset sales will be used to reduce debt and/or fund share repurchases.
350 Park Avenue
On January 24, 2023, we and the Rudin family (“Rudin”) completed agreements with Citadel Enterprise Americas LLC (“Citadel”) and with an affiliate of Kenneth C. Griffin, Citadel’s Founder and CEO (“KG”), for a series of transactions relating to 350 Park Avenue and 40 East 52nd Street.
Pursuant to the agreements, Citadel master leases 350 Park Avenue, a 585,000 square foot Manhattan office building, on an “as is” basis for ten years, with an initial annual net rent of $36,000,000. Per the terms of the lease, no tenant allowance or free rent was provided. Citadel will also master lease Rudin’s adjacent property at 40 East 52nd Street (390,000 square feet).
In addition, we have entered into a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40,000,000 and, upon formation of the KG joint venture described below, will combine that property with 350 Park Avenue and 40 East 52nd Street to create a premier development site (collectively, the “Site”). The purchase is expected to close in the second quarter of 2023.
From October 2024 to June 2030, KG will have the option to either:
•acquire a 60% interest in a joint venture with Vornado/Rudin that would value the Site at $1.2 billion ($900,000,000 to Vornado and $300,000,000 to Rudin) and build a new 1,700,000 square foot office tower (the “Project”) pursuant to East Midtown Subdistrict zoning with Vornado/Rudin as developer. KG would own 60% of the joint venture and Vornado/Rudin would own 40% (with Vornado owning 36% and Rudin owning 4% of the joint venture along with a $250,000,000 preferred equity interest in the Vornado/Rudin joint venture).
◦at the joint venture formation, Citadel or its affiliates will execute a pre-negotiated 15-year anchor lease with renewal options for approximately 850,000 square feet (with expansion and contraction rights) at the Project for its primary office in New York City;
◦the rent for Citadel’s space will be determined by a formula based on a percentage return (that adjusts based on the actual cost of capital) on the total Project cost;
◦the master leases will terminate at the scheduled commencement of demolition;
•or, exercise an option to purchase the Site for $1.4 billion ($1.085 billion to Vornado and $315,000,000 to Rudin), in which case Vornado/Rudin would not participate in the new development.
Further, Vornado/Rudin will have the option from October 2024 to September 2030 to put the Site to KG for $1.2 billion ($900,000,000 to Vornado and $300,000,000 to Rudin). For ten years following any put option closing, unless the put option is exercised in response to KG’s request to form the joint venture or KG makes a $200,000,000 termination payment, Vornado/Rudin will have the right to invest in a joint venture with KG on the terms described above if KG proceeds with development of the Site.


44
57


Overview - continued


Dispositions
Alexander's, Inc. ("Alexanders")
On March 8, 2023, Alexander's entered into an agreement to sell the Rego Park III land parcel, located in Queens, New York, for $71,060,000, inclusive of consideration for Brownfield tax benefits and reimbursement of costs for plans, specifications and improvements to date. Alexander's anticipates the closing of the sale in the second quarter of 2023 and will recognize a financial statement gain of approximately $54,000,000. Upon completion of the sale, we will recognize our approximate $16,000,000 share of the net gain.
Financings

150 West 34th Street Loan Participation
On June 1, 2017, Alexander’s, Inc. (NYSE: ALX)January 9, 2023, our $105,000,000 participation in the $205,000,000 mortgage loan on 150 West 34th Street was repaid, which reduced “other assets” and “mortgages payable, net” on our consolidated balance sheets by $105,000,000. The remaining $100,000,000 mortgage loan balance bears interest at SOFR plus 1.86%, in which we have a 32.4% ownership interest, completed a $500,000,000 refinancing of the office portion of 731 Lexington Avenue. The interest-only loan is at LIBOR plus 0.90% (2.14% at September 30, 2017) and matures in June 2020 with four one-year extension options. In connection therewith, Alexander’s purchasedsubject to an interest rate cap arrangement with a notional amount of $500,000,000 that caps LIBOR at aSOFR strike rate of 6.00%. The property was previously encumbered by a $300,000,000 interest-only mortgage at LIBOR plus 0.95% which was scheduled to mature in March 2021.

On June 15, 2017, the joint venture, in which we have a 50.1% interest, completed a $271,000,000 loan facility, with an initial advance of $202,299,000 for the Moynihan Office Building. The interest-only loan is at LIBOR plus a 3.25% (4.48% at September 30, 2017) and matures in June 2019 with two one-year extension options.

On June 20, 2017, we completed a $220,000,000 financing of The Bartlett residential building. The five-year interest-only loan is at LIBOR plus 1.70% (2.90% at September 30, 2017)4.10%, and matures in June 2022. On July 17, 2017,May 2024.
Interest Rate Hedging Activities
We entered into the property, the loan and the $217,000,000 of net proceeds were transferred to JBGS in connection with the tax-free spin-off of our Washington, DC segment.

On July 17, 2017, prior to completion of the tax-free spin-off of our Washington, DC segment, we repaid the $43,581,000 LIBOR plus 1.25% mortgage encumbering 1700 and 1730 M Street which was scheduled to mature in August 2017. The unencumbered property was then transferred to JBGS in connection with the tax-free spin-off of our Washington, DC segment.

On July 19, 2017, the joint venture, in which we have a 25.0% interest, completed a $500,000,000 refinancing of 330 Madison Avenue, an 845,000 square foot Manhattan office building. The seven-year interest-only loan matures in August 2024 and has a fixed rate of 3.43%. Our share of net proceeds, after repayment of the existing $150,000,000 LIBOR plus 1.30% mortgage and closing costs, was approximately $85,000,000.

On August 23, 2017, the joint venture, in which we have a 50.0% interest, completed a $1.2 billion refinancing of 280 Park Avenue, a 1,250,000 square foot Manhattan office building. The loan is interest-only at LIBOR plus 1.73% (2.97% at September 30, 2017) and matures in September 2019 with five one-year extension options. Our share of net proceeds, after repayment of the existing $900,000,000 LIBOR plus 2.00% mortgage and closing costs, was approximately $140,000,000.

On October 17, 2017, we extended one of our two $1.25 billion unsecured revolving credit facilities from November 2019 to January 2022 with two six-month extension options. Thefollowing interest rate swap agreements during the three months ended March 31, 2023. See Note 13 - Fair Value Measurements in Part I, Item 1 of this Quarterly Report on the extended facility was lowered from LIBOR plus 1.05% to LIBOR plus 1.00%. Form 10-Q for further information on our consolidated hedging instruments:
(Amounts in thousands)Notional AmountAll-In Swapped RateSwap Expiration DateVariable Rate Spread
555 California Street (effective 05/24)$840,000 5.92%05/26L+193
Unsecured term loan(1) (effective 10/23)
150,0005.13%07/25S+130
____________________
(1)The facility fee remains at 20 basis points. The interest rate and facility fees are the same as our other $1.25 billion unsecured revolving credit facility,term loan, which matures in February 2021 with two six-month extension options.December 2027, is subject to various interest rate swap arrangements through August 2027, see below for details:

Swapped BalanceAll-In Swapped RateUnswapped Balance
(bears interest at S+130)
Through 10/23$800,000 4.05%$— 
10/23 through 07/25700,000 4.53%100,000 
07/25 through 10/26550,000 4.36%250,000 
10/26 through 08/2750,000 4.04%750,000 
Other Activities

On May 9, 2017, a $150,000,000 mezzanine loan owned by a joint venture in which we have a 33.3% ownership interest was repaid at its maturity and we received our $50,000,000 share. The mezzanine loan earned interest at LIBOR plus 9.42%.

On May 26, 2017, Sterling Suffolk Racecourse, LLC ("Suffolk Downs JV"), a joint venture in which we have a 21.2% equity interest, sold the property comprising the Suffolk Downs racetrack in East Boston, Massachusetts (“Suffolk Downs”) for $155,000,000, which resulted in net proceeds and a net gain to us of $15,314,000.  In addition, we were repaid $29,318,000 of principal and $6,129,000 of accrued interest on our debt investments in Suffolk Downs JV, resulting in a net gain of $11,373,000.  

On September 29, 2017, Vornado Capital Partners Real Estate Fund (the "Fund") completed the sale of 800 Corporate Pointe in Culver City, CA for $148,000,000. From the inception of this investment through its disposition, the Fund realized a $35,620,000 net gain.


58

Overview - continued

Recently Issued Accounting Literature

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an update ("ASU 2014-09") establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09, as amended by subsequent ASUs on the topic, establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard, which is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. We will adopt this standard effective January 1, 2018, with the exception of the components of revenue from leases, which has been deferred until the adoption of the update ASU 2016-02 to ASC Topic 842, Leases, on January 1, 2019. We will utilize the modified retrospective method when adopting ASU 2014-09, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. We have analyzed our revenue streams and identified the areas that we expect to be impacted by the adoption of this standard. We expect this standard will have an impact on the classification of reimbursements of real estate taxes and insurance expenses and certain non-lease components of revenue (e.g., reimbursements of common area maintenance expenses) from leases with no material impact on "total revenues", for new leases executed on or after January 1, 2019. We are in the process of completing the evaluation of the overall impact of this standard on our consolidated financial statements, including required informational disclosures for our revenue streams beginning with the first reporting period after adoption.

In January 2016, the FASB issued an update (“ASU 2016-01”) Recognition and Measurement of Financial Assets and Financial Liabilities to ASCTopic 825, Financial Instruments.  ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We will adopt this standard effective January 1, 2018. While the adoption of this standard requires us to continue to measure “marketable securities” at fair value at each reporting date, the changes in fair value will be recognized in current period earnings as opposed to “other comprehensive income (loss).”

In February 2016, the FASB issued an update ASU 2016-02 establishing ASC Topic 842, Leases, which sets out the principlesLeasing Activity for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. We are currently evaluating the overall impact of the adoption of ASU 2016-02 on our consolidated financial statements and believe that the standard will more significantly impact the accounting for leases in which we are a lessee. We have a number of ground leases for which we will be required to record a right-of-use asset and lease liability equal to the present value of the remaining minimum lease payments upon adoption of this standard. We also expect that this standard will require us to allocate total consideration from leases between lease and non-lease components based on the estimated stand-alone selling prices of the components. The lease components (e.g., base rent) will continue to be recognized on a straight-line basis over the term of the lease and certain non-lease components (e.g., reimbursements of common area maintenance expenses) will be accounted for under the new revenue recognition guidance of ASU 2014-09. As a result, we expect that this standard will have an impact on the classification of reimbursements of real estate taxes, insurance expenses and common area maintenance expenses on our consolidated statements of income, with no impact on "total revenue", for new leases executed on or after January 1, 2019. Under ASU 2016-02, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, we may no longer be able to capitalize internal leasing costs and instead may be required to expense these costs as incurred. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We will adopt this standard effective January 1, 2019 using the modified retrospective approach and will elect to use the practical expedients provided by this standard.

InThree Months Ended March 2016, the FASB issued an update (“ASU 2016-09”) Improvements to Employee Share-Based Payment Accounting to ASC Topic 718, Compensation - Stock Compensation (“ASC 718”).  ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 was effective for interim and annual reporting periods in fiscal years beginning after December 15, 2016.  The adoption of this update as of January 1, 2017 did not have a material impact on our consolidated financial statements.



59

Overview - continued

Recently Issued Accounting Literature - continued

In August 2016, the FASB issued an update (“ASU 2016-15”) Classification of Certain Cash Receipts and Cash Payments to ASC Topic 230, Statement of Cash Flows. ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-15 effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. The adoption of ASU 2016-15 impacted our classification of distributions received from equity method investees. We selected the nature of earnings approach for classifying distributions. Under this approach, the distributions from equity method investees are classified on the basis of the nature of the activity of the investee that generated the distribution. The retrospective application of ASU 2016-15 resulted in the reclassification of certain distributions of income from partially owned entities to distributions of capital from partially owned entities, which reduced net cash provided by operating activities and net cash used in investing activities by $1,839,000 for the nine months ended September 30, 2016.

In November 2016, the FASB issued an update (“ASU 2016-18”) Restricted Cash to ASC Topic 230, Statement of Cash Flows. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2016-18 effective January 1, 2017, with retrospective application to our consolidated statements of cash flows. Accordingly, the consolidated statements of cash flows present a reconciliation of the changes in cash and cash equivalents and restricted cash. Restricted cash primarily consists of security deposits, cash restricted for the purposes of facilitating a Section 1031 Like-Kind Exchange, cash restricted in connection with our deferred compensation plan and cash escrowed under loan agreements for debt service, real estate taxes, property insurance and capital improvements.

In February 2017, the FASB issued an update (“ASU 2017-05”) Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets to ASC Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets. ASU 2017-05 clarifies the scope of recently established guidance on nonfinancial asset derecognition, as well as the accounting for partial sales of nonfinancial assets. This update conforms the derecognition guidance on nonfinancial assets with the model for transactions in ASC 606. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The adoption of this standard on January 1, 2018 is not expected to have an impact on our consolidated financial statements.

In May 2017, the FASB issued an update (“ASU 2017-09”) Scope of Modification Accounting to ASC 718. ASU 2017-09 provides guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. ASU 2017-09 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. The adoption of this standard on January 1, 2018 is not expected to have an impact on our consolidated financial statements.

In August 2017, the FASB issued an update (“ASU 2017-12”) Targeted Improvements to Accounting for Hedging Activities to ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASU 2017-12 amends the hedge accounting recognition and presentation requirements in ASC 815. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. ASU 2017-12 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2017-12 on our consolidated financial statements, but do not believe the adoption of this standard will have a material impact on our consolidated financial statements.

Critical Accounting Policies

A summary of our critical accounting policies is included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2016 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no significant changes to our policies during 2017.



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Overview - continued

Leasing Activity

2023
The leasing activity and related statistics in the table below are based on leases signed during the period and are not intended to coincide with the commencement of rental revenue in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Second generation relet space represents square footage that has not been vacant for more than nine months and tenant improvements and leasing commissions are based on our share of square feet leased during the period.
•777,000 square feet of New York Office space (771,000 square feet at share) at an initial rent of $101.02 per square foot and a weighted average lease term of 9.5 years. The changes in the GAAP and cash mark-to-market rent on the 677,000 square feet of second generation space were positive 8.5% and positive 1.7%, respectively. Tenant improvements and leasing commissions were $2.48 per square foot per annum, or 2.5% of initial rent.
•25,000 square feet of New York Retail space (20,000 square feet at share) at an initial rent of $373.07 per square foot and a weighted average lease term of 6.8 years. The changes in the GAAP and cash mark-to-market rent on the 7,000 square feet of second generation space were positive 2.9% and positive 2.4%, respectively. Tenant improvements and leasing commissions were $26.54 per square foot per annum, or 7.1% of initial rent.
•79,000 square feet at THE MART (all at share) at an initial rent of $56.44 per square foot and a weighted average lease term of 6.8 years. The changes in the GAAP and cash mark-to-market rent on the 51,000 square feet of second generation space were negative 1.5% and negative 7.9%, respectively. Tenant improvements and leasing commissions were $8.04 per square foot per annum, or 14.2% of initial rent.
•4,000 square feet at 555 California Street (3,000 square feet at share) at an initial rent of $156.96 per square foot and a weighted average lease term of 7.0 years. The 4,000 square feet was first generation space. Tenant improvements and leasing commissions were $39.07 per square foot per annum, or 24.9% of initial rent.

(Square feet in thousands)New York    
  Office Retail theMART 555 California Street
Three Months Ended September 30, 2017       
 Total square feet leased452
 51
 36
 61
 Our share of square feet leased:405
 38
 36
 43
 
Initial rent(1)
$83.09
 $346.34
 $54.11
 $71.77
 Weighted average lease term (years)9.9
 6.1
 5.4
 7.8
 Second generation relet space:       
 Square feet322
 22
 22
 —
 GAAP basis:       
 
Straight-line rent(2)
$81.46
 $89.13
 $62.79
 $—
 Prior straight-line rent$72.79
 $112.10
 $46.03
 $—
 Percentage increase (decrease)11.9% (20.5)%
(3) 
36.4% —%
 Cash basis:       
 
Initial rent(1)
$83.64
 $87.36
 $61.02
 $—
 Prior escalated rent$75.21
 $85.19
 $49.56
 $—
 Percentage increase11.2% 2.5 % 23.1% —%
 Tenant improvements and leasing commissions:       
 Per square foot$84.69
 $232.54
 $30.18
 $131.32
 Per square foot per annum$8.55
 $38.12
 $5.59
 $16.83
 Percentage of initial rent10.2% 11.0 % 10.3% 23.5%

45
Nine Months Ended September 30, 2017       
 Total square feet leased1,548
 87
 227
 132
 Our share of square feet leased:1,188
 68
 227
 93
 
Initial rent(1)
$79.35
 $278.05
 $48.37
 $79.98
 Weighted average lease term (years)8.4
 6.0
 6.9
 9.4
 Second generation relet space:       
 Square feet813
 44
 207
 46
 GAAP basis:       
 
Straight-line rent(2)
$73.89
 $158.51
 $48.53
 $95.09
 Prior straight-line rent$64.62
 $140.76
 $37.45
 $80.30
 Percentage increase14.3% 12.6% 29.6% 18.4%
 Cash basis:       
 
Initial rent(1)
$75.52
 $150.88
 $48.27
 $86.49
 Prior escalated rent$68.23
 $131.03
 $39.83
 $78.67
 Percentage increase10.7% 15.1% 21.2% 9.9%
 Tenant improvements and leasing commissions:       
 Per square foot$74.59
 $156.88
 $42.22
 $111.81
 Per square foot per annum$8.88
 $26.15
 $6.12
 $11.89
 Percentage of initial rent11.1% 9.4% 12.7% 14.9%
____________________
(1)Represents the cash basis weighted average starting rent per square foot, which is generally indicative of market rents. Most leases include free rent and periodic step-ups in rent which are not included in the initial cash basis rent per square foot but are included in the GAAP basis straight-line rent per square foot.
(2)Represents the GAAP basis weighted average rent per square foot that is recognized over the term of the respective leases, and includes the effect of free rent and periodic step-ups in rent.
(3)Attributable to a single lease for 20,800 square feet at share at 1290 Avenue of the Americas that was the subject of a FAS 141 below market lease upward adjustment when we acquired the property in 2007. Excluding the FAS 141 adjustment the GAAP basis increase in rent would have been 8.0%.


61


Overview - continued


Square Footage (in service) and Occupancy as of September 30, 2017March 31, 2023
(Square feet in thousands)Square Feet (in service)
Number of
Properties		Total
Portfolio		Our
Share		Occupancy %
New York:
Office30 (1)18,748 16,050 91.8 %
Retail (includes retail properties that are in the base of our office properties)56 (1)2,260 1,822 74.2 %
Residential - 1,976 units(2)
6 (1)1,499 766 96.8 %(2)
Alexander's6 2,454 795 86.9 %(2)
24,961 19,433 89.9 %
Other:
THE MART4 3,634 3,625 80.3 %
555 California Street3 1,819 1,274 94.9 %
Other11 2,537 1,202 92.4 %
7,990 6,101 
Total square feet as of March 31, 202332,951 25,534 
(Square feet in thousands)  Square Feet (in service)  
 
Number of
Properties
 
Total
Portfolio
 
Our
Share
 Occupancy %
New York:       
Office37
 20,242
 16,968
 97.0%
Retail72
 2,709
 2,473
 95.7%
Residential - 1,696 units11
 1,568
 835
 94.4%
Alexander's, including 312 residential units7
 2,437
 790
 99.3%
Hotel Pennsylvania1
 1,400
 1,400
  
   28,356
 22,466
 96.9%
Other:       
theMART3
 3,689
 3,680
 98.7%
555 California Street3
 1,740
 1,218
 94.2%
Rosslyn Plaza Office and Residential - 197 units6
 690
 313
 65.9%
Other4
 1,836
 877
 99.8%
   7,955
 6,088
  
        
Total square feet as of September 30, 2017  36,311
 28,554
  
____________________

See notes below.

Square Footage (in service) and Occupancy as of December 31, 20162022
(Square feet in thousands)Square Feet (in service)
Number of
properties		Total
Portfolio		Our
Share		Occupancy %
New York:
Office30 (1)18,724 16,028 91.9 %
Retail (includes retail properties that are in the base of our office properties)56 (1)2,289 1,851 74.4 %
Residential - 1,976 units(2)
6 (1)1,499 766 96.7 %(2)
Alexander's6 2,241 726 96.4 %(2)
24,753 19,371 90.4 %
Other:    
THE MART4 3,635 3,626 81.6 %
555 California Street3 1,819 1,273 94.7 %
Other11 2,532 1,197 92.6 %
  7,986 6,096  
Total square feet as of December 31, 202232,739 25,467 
____________________
(1)Reflects the Office, Retail and Residential space within our 71 total New York properties as of March 31, 2023 and December 31, 2022.
(2)The Alexander Apartment Tower (312 units) is reflected in Residential unit count and occupancy.
Critical Accounting Estimates
A summary of our critical accounting policies and estimates used in the preparation of our consolidated financial statements is included in Part II, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. For the three months ended March 31, 2023, there were no material changes to these policies.
Recently Issued Accounting Literature
Refer to Note 3 - Recently Issued Accounting Literature to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that may affect us.
46
(Square feet in thousands)  Square Feet (in service)  
 
Number of
properties
 
Total
Portfolio
 
Our
Share
 Occupancy %
New York:       
Office36
 20,227
 16,962
 96.3%
Retail70
 2,672
 2,464
 97.1%
Residential - 1,692 units11
 1,559
 826
 95.7%
Alexander's, including 312 residential units7
 2,437
 790
 99.8%
Hotel Pennsylvania1
 1,400
 1,400
  
   28,295
 22,442
 96.5%
Other:       
theMART3
 3,671
 3,662
 98.9%
555 California Street3
 1,738
 1,217
 92.4%
Rosslyn Plaza Office and Residential - 196 units6
 746
 339
 64.0%
Other4
 1,811
 850
 99.8%
   7,966
 6,068
  
        
Total square feet as of December 31, 2016  36,261
 28,510
  



62


Net Income, EBITDA and NOI At Share by Segment for the Three Months Ended September 30, 2017March 31, 2023 and 20162022

As a resultNOI at share represents total revenues less operating expenses including our share of partially owned entities. NOI at share - cash basis represents NOI at share adjusted to exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We consider NOI at share - cash basis to be the spin-offprimary non-GAAP financial measure for making decisions and assessing the unlevered performance of our Washington, DC segment, effective July 1, 2017, the Washington, DC segment has been reclassifiedsegments as it relates to the Other segment. We have also reclassified the prior period segment financial results to conformtotal return on assets as opposed to the current period presentation.levered return on equity. As properties are bought and sold based on NOI at share - cash basis, we utilize this measure to make investment decisions as well as to compare the performance of our assets to that of our peers. NOI at share and NOI at share - cash basis should not be considered alternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.
Below is a summary of net incomeNOI at share and a reconciliation of net income to EBITDA(1) and NOI(1) at share - cash basisby segment for the three months ended September 30, 2017.March 31, 2023 and 2022.
(Amounts in thousands)For the Three Months Ended March 31, 2023
TotalNew YorkOther
Total revenues$445,923 $363,814 $82,109 
Operating expenses(228,773)(188,321)(40,452)
NOI - consolidated217,150 175,493 41,657 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(11,764)(4,823)(6,941)
Add: NOI from partially owned entities68,097 65,324 2,773 
NOI at share273,483 235,994 37,489 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other5,052 5,033 19 
NOI at share - cash basis$278,535 $241,027 $37,508 

(Amounts in thousands)For the Three Months Ended March 31, 2022
TotalNew YorkOther
Total revenues$442,130 $358,548 $83,582 
Operating expenses(216,529)(177,535)(38,994)
NOI - consolidated225,601 181,013 44,588 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(20,035)(13,310)(6,725)
Add: NOI from partially owned entities78,692 75,964 2,728 
NOI at share284,258 243,667 40,591 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net, and other(3,130)(3,975)845 
NOI at share - cash basis$281,128 $239,692 $41,436 
The elements of our New York and Other NOI at share for the three months ended March 31, 2023 and 2022 are summarized below.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
New York:
Office$174,270 $177,809 
Retail47,196 52,105 
Residential5,458 4,774 
Alexander's9,070 8,979 
Total New York235,994 243,667 
Other:
THE MART15,409 19,914 
555 California Street16,929 16,235 
Other investments5,151 4,442 
Total Other37,489 40,591 
NOI at share$273,483 $284,258 
47
(Amounts in thousands)For the Three Months Ended September 30, 2017 
 Total New York Other 
Total revenues$528,755
 $453,609
 $75,146
 
Total expenses366,520
 284,976
 81,544
 
Operating income (loss)162,235
 168,633
 (6,398) 
(Loss) income from partially owned entities(41,801) 1,411
 (43,212) 
Loss from real estate fund investments(6,308) —
 (6,308) 
Interest and other investment income, net9,306
 1,413
 7,893
 
Interest and debt expense(85,068) (61,529) (23,539) 
Income (loss) before income taxes38,364
 109,928
 (71,564) 
Income tax expense(1,188) (1,087) (101) 
Income (loss) from continuing operations37,176
 108,841
 (71,665) 
Loss from discontinued operations(47,930) —
 (47,930) 
Net (loss) income(10,754) 108,841
 (119,595) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(4,022) (2,552) (1,470) 
Net (loss) income attributable to the Operating Partnership(14,776) 106,289
 (121,065) 
Interest and debt expense(2)
113,438
 84,907
 28,531
 
Depreciation and amortization(2)
136,621
 104,799
 31,822
 
Income tax expense (2)
1,462
 1,182
 280
 
EBITDA(1)
236,745
 297,177
(3) 
(60,432)
(4) 
Acquisition and transaction related costs, including $53,581 for the spin-off of JBGS53,642
 —
 53,642
 
Impairment loss on investment in PREIT44,465
 —
 44,465
 
General and administrative expenses less $1,975 mark-to-market of our deferred compensation plan35,495
 9,479
 26,016
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(23,304) (21,435) (1,869) 
Our share of net realized/unrealized losses from our real estate fund investments10,394
 —
 10,394
 
Net gain resulting from UE operating partnership unit issuances(5,200) —
 (5,200) 
Real estate impairment losses(2)
4,354
 —
 4,354
 
Net gains on sale of real estate and other(2)
(1,547) —
 (1,547) 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(12,207) (12,207) —
 
Dividends received from Alexander's7,030
 7,030
 —
 
Our share of PREIT EBITDA(3,731) —
 (3,731) 
Distributions received from PREIT1,361
 —
 1,361
 
Our share of UE EBITDA (excluding management fees)(2,513) —
 (2,513) 
Distributions received from UE1,257
 —
 1,257
 
NOI(1)
$346,241
 $280,044
(3) 
$66,197
(4) 
____________________
See notes on pages 65 through 66.


63


Net Income, EBITDA and NOI At Share by Segment for the Three Months Ended September 30, 2017March 31, 2023 and 20162022 - continued

The elements of our New York and Other NOI at share - cash basis for the three months ended March 31, 2023 and 2022 are summarized below.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
New York:
Office$182,081 $177,827 
Retail44,034 47,393 
Residential5,051 4,689 
Alexander's9,861 9,783 
Total New York241,027 239,692 
Other:
THE MART14,675 20,436 
555 California Street17,718 16,360 
Other investments5,115 4,640 
Total Other37,508 41,436 
NOI at share - cash basis$278,535 $281,128 

Reconciliation of Net Income to NOI At Share and NOI At Share - Cash Basis for the Three Months Ended March 31, 2023 and 2022
Below is a summary of net income and a reconciliation of net income to EBITDA(1) NOI at share and NOI(1) by segment at share - cash basis for the three months ended September 30, 2016.March 31, 2023 and 2022.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Net income$11,198 $53,375 
Depreciation and amortization expense106,565 117,443 
General and administrative expense41,595 41,216 
Transaction related costs and other658 1,005 
Income from partially owned entities(16,666)(33,714)
Loss (income) from real estate fund investments19 (5,674)
Interest and other investment income, net(9,603)(1,018)
Interest and debt expense86,237 52,109 
Net gains on disposition of wholly owned and partially owned assets(7,520)(6,552)
Income tax expense4,667 7,411 
NOI from partially owned entities68,097 78,692 
NOI attributable to noncontrolling interests in consolidated subsidiaries(11,764)(20,035)
NOI at share273,483 284,258 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other5,052 (3,130)
NOI at share - cash basis$278,535 $281,128 
(Amounts in thousands)For the Three Months Ended September 30, 2016 
 Total New York Other 
Total revenues$502,753
 $432,869
 $69,884
 
Total expenses354,292
 280,689
 73,603
 
Operating income (loss)148,461
 152,180
 (3,719) 
Income (loss) from partially owned entities3,811
 (579) 4,390
 
Income from real estate fund investments1,077
 —
 1,077
 
Interest and other investment income, net6,459
 1,355
 5,104
 
Interest and debt expense(79,721) (51,212) (28,509) 
Income (loss) before income taxes80,087
 101,744
 (21,657) 
Income tax expense(4,563) (2,356) (2,207) 
Income (loss) from continuing operations75,524
 99,388
 (23,864) 
Income from discontinued operations25,080
 —
 25,080
 
Net income100,604
 99,388
 1,216
 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(3,658) (2,985) (673) 
Net income attributable to the Operating Partnership96,946
 96,403
 543
 
Interest and debt expense(2)
122,979
 66,314
 56,665
 
Depreciation and amortization(2)
172,980
 111,731
 61,249
 
Income tax expense(2)
5,102
 2,445
 2,657
 
EBITDA(1)
398,007
 276,893
(3) 
121,114
(4) 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(46,500) (35,199) (11,301) 
General and administrative expenses less $204 mark-to-market of our deferred compensation plan40,238
 9,783
 30,455
 
Net gains on sale of real estate and other(2)
(5,386) —
 (5,386) 
Acquisition and transaction related costs, including $2,739 for the spin-off of JBGS3,808
 —
 3,808
 
Real estate impairment losses(2)
1,599
 —
 1,599
 
Our share of net realized/unrealized losses from our real estate fund investments99
 —
 99
 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(11,506) (11,506) —
 
Dividends received from Alexander's6,617
 6,617
 —
 
Our share of PREIT EBITDA(3,070) —
 (3,070) 
Distributions received from PREIT1,342
 —
 1,342
 
Our share of UE EBITDA (excluding management fees)(2,514) —
 (2,514) 
Distributions received from UE1,143
 —
 1,143
 
NOI(1)
$383,877
 $246,588
(3) 
$137,289
(4) 
____________________
See notes on the following pages.


64


Net Income, EBITDA and NOI by Segment for the Three Months Ended September 30, 2017 and 2016 - continued

Notes to preceding tabular information:

(1)
EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization."  NOI represents "Net Operating Income" on a cash basis. We calculate EBITDA and NOI on an Operating Partnership basis which is before allocation to the noncontrolling interest of the Operating Partnership.  We consider EBITDA the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. We also consider NOI a key non-GAAP financial measure. NOI is before general and administrative expenses, straight-line rental income and expense, amortization of acquired below and above market leases, net, acquisition and transaction related costs, our share of net realized and unrealized gains or losses from our real estate fund investments, impairment losses and gains on disposal of assets. As properties are bought and sold based on a multiple of NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to those of our peers. EBITDA and NOI should not be considered substitutes for net income. EBITDA and NOI may not be comparable to similarly titled measures employed by other companies.

Our 7.5% interest in Fashion Centre Mall/Washington Tower and our interest in Rosslyn Plaza (ranging from 43.7% to 50.4%) were not included in the spin-off of our Washington, DC segment and have been reclassified to Other. The prior year's presentation has been conformed to the current year.  In addition, on January 1, 2017, we reclassified our investment in 85 Tenth Avenue from Other to the New York segment as a result of the December 1, 2016 repayment of our loans receivable and the receipt of a 49.9% ownership interest in the property. 

(2)
Adjustments include our proportionate share of partially owned entities and give effect to noncontrolling interest's share of consolidated subsidiaries.

(3)The elements of "New York" EBITDA are summarized below.
 (Amounts in thousands)For the Three Months Ended September 30, 
  2017 2016 
 Office$183,162
 $164,150
(a) 
 Retail90,316
 91,061
(a) 
 Residential5,981
 6,214
 
 Alexander's12,207
 11,506
 
 Hotel Pennsylvania5,511
 3,962
 
 Total New York EBITDA$297,177
 $276,893
 

The elements of "New York" NOI are summarized below.
 (Amounts in thousands)For the Three Months Ended September 30, 
  2017 2016 
 Office$179,505
 $157,643
(a) 
 Retail81,839
 72,178
(a) 
 Residential5,418
 5,525
 
 Alexander's7,030
 6,617
 
 Hotel Pennsylvania6,252
 4,625
 
 Total New York NOI, as adjusted$280,044
 $246,588
 
_____________________
(a)Beginning in January 2017 for office buildings with retail at the base, we have adjusted the allocation of real estate taxes between the retail and office elements above. This has no effect on our consolidated financial statements but resulted in a reallocation of $4,213 of income from retail to office for the three months ended September 30, 2016.





65


Net Income, EBITDA and NOI by Segment for the Three Months Ended September 30, 2017 and 2016 - continued

Notes to preceding tabular information - continued:

(4)The elements of "Other" EBITDA are summarized below.
 (Amounts in thousands)For the Three Months Ended September 30,
  2017 2016
 theMART (including trade shows)$24,165
 $21,696
 555 California Street11,643
 11,405
 Other investments11,379
 20,388
 
Corporate general and administrative expenses(a)
(22,730) (21,519)
 
Investment income and other, net(a)
5,910
 6,871
 Other EBITDA, as adjusted30,367
 38,841
 Certain items that impact EBITDA:   
 JBG SMITH Properties which is treated as a discontinued operation:   
 Transaction costs(53,581) (2,739)
 Operating results through July 17, 2017 spin-off13,038
 75,307
  (40,543) 72,568
 Impairment loss on investment in Pennsylvania REIT(44,465) —
 (Loss) income from real estate fund investments, net(7,794) 807
 Net gain resulting from UE Properties operating partnership unit issuances5,200
 —
 Other(3,197) 8,898
 Total of certain items that impact EBITDA(90,799) 82,273
 Other EBITDA$(60,432) $121,114
The elements of "Other" NOI are summarized below.
 (Amounts in thousands)For the Three Months Ended September 30,
  2017 2016
 theMART (including trade shows)$25,422
 $21,758
 555 California Street11,013
 9,899
 Other investments7,589
 21,381
 
Investment income and other, net(a)
5,910
 6,871
 Other NOI, as adjusted49,934
 59,909
 Certain items that impact NOI:   
 JBG SMITH Properties operating results through July 17, 2017 spin-off12,971
 72,919
 Our share of real estate fund investments2,600
 2,555
 Other692
 1,906
 Total of certain items that impact NOI16,263
 77,380
 Other NOI$66,197
 $137,289

(a)The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $1,975 and $204 of income for the three months ended September 30, 2017 and 2016, respectively.

EBITDAAt Share by Region

Below is a summary of the percentages of EBITDA by geographic region, excluding gains on sale of real estate, non-cash impairment losses and operations of sold properties.
For the Three Months Ended March 31,
20232022
Region:
New York City metropolitan area88 %87 %
Chicago, IL6 %7 %
San Francisco, CA6 %6 %
100 %100 %
48
 For the Three Months Ended September 30,
 2017 2016
Region:   
New York City metropolitan area89% 89%
Chicago, IL7% 7%
San Francisco, CA4% 4%
 100% 100%


66




Results of Operations – Three Months Ended September 30, 2017March 31, 2023 Compared to September 30, 2016March 31, 2022


Revenues
Our revenues which consist of property rentals, tenant expense reimbursements, and fee and other income, were $528,755,000$445,923,000 for the three months ended September 30, 2017March 31, 2023 compared to $502,753,000$442,130,000 for the prior year’s quarter, an increase of $26,002,000.$3,793,000. Below are the details of the increase (decrease) by segment:
(Amounts in thousands)TotalNew YorkOther
(Decrease) increase due to:
Rental revenues:
Acquisitions, dispositions and other$(11,983)$(11,983)$— 
Development and redevelopment314 314 — 
Trade shows(96)— (96)
Same store operations11,275 12,340 (1,065)
(490)671 (1,161)
Fee and other income:
BMS cleaning fees2,637 2,967 (330)
Management and leasing fees280 206 74 
Other income1,366 1,422 (56)
4,283 4,595 (312)
Total increase (decrease) in revenues$3,793 $5,266 $(1,473)


Expenses
Our expenses were $381,319,000 for the three months ended March 31, 2023, compared to $374,249,000 for the prior year’s quarter, an increase of $7,070,000. Below are the details of the increase by segment:
(Amounts in thousands)TotalNew YorkOther
(Decrease) increase due to:
Operating:
Acquisitions, dispositions and other$(4,253)$(4,253)$— 
Development and redevelopment3,197 3,197 — 
Non-reimbursable expenses4,176 3,282 894 
Trade shows411 — 411 
BMS expenses2,395 2,725 (330)
Same store operations6,318 5,835 483 
12,244 10,786 1,458 
Depreciation and amortization:
Acquisitions, dispositions and other(11,328)(11,328)— 
Development and redevelopment36 36 — 
Same store operations414 1,036 (622)
(10,878)(10,256)(622)
General and administrative379 964 (585)
Expense from deferred compensation plan liability5,672 — 5,672 
Transaction related costs and other(347)(565)218 
Total increase in expenses$7,070 $929 $6,141 
49
(Amounts in thousands)Total New York Other
Increase (decrease) due to:     
Property rentals:     
Acquisitions, dispositions and other$3,228
 $3,002
 $226
Development and redevelopment89
 (93) 182
Hotel Pennsylvania3,215
 3,215
 —
Trade shows497
 —
 497
Same store operations13,880
 10,901
 2,979
 20,909
 17,025
 3,884
Tenant expense reimbursements:     
Acquisitions, dispositions and other(680) (680) —
Development and redevelopment309
 (37) 346
Same store operations2,815
 1,737
 1,078
 2,444
 1,020
 1,424
Fee and other income:     
BMS cleaning fees1,896
 2,904
 (1,008)
Management and leasing fees396
 354
 42
Lease termination fees(830) (239) (591)
Other income1,187
 (324) 1,511
 2,649
 2,695
 (46)
      
Total increase in revenues$26,002
 $20,740
 $5,262



67



Results of Operations – Three Months Ended September 30, 2017March 31, 2023 Compared to September 30, 2016March 31, 2022 - continued

Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative expenses, and acquisition and transaction related costs, were $366,520,000 for the three months ended September 30, 2017, compared to $354,292,000 for the prior year’s quarter, an increase of $12,228,000.  Below are the details of the increase by segment:
(Amounts in thousands)Total New York Other 
(Decrease) increase due to:      
Operating:      
 Acquisitions, dispositions and other$(786) $(786) $—
 
 Development and redevelopment453
 75
 378
 
 Non-reimbursable expenses, including bad debt reserves(1,459) (2,040) 581
 
 Hotel Pennsylvania1,607
 1,607
 —
 
 Trade shows270
 —
 270
 
 BMS expenses1,586
 2,502
 (916) 
 Same store operations9,793
 6,729
 3,064
 
  11,464
 8,087
 3,377
 
Depreciation and amortization:      
 Acquisitions, dispositions and other117
 117
 —
 
 Development and redevelopment(159) (24) (135) 
 Same store operations(863) (3,589) 2,726
 
  (905) (3,496) 2,591
 
General and administrative:      
 Mark-to-market of deferred compensation plan liability1,771
 —
 1,771
(1) 
 Same store operations906
 (304) 1,210
 
  2,677
 (304) 2,981
 
        
Acquisition and transaction related costs(1,008) —
 (1,008) 
        
Total increase in expenses$12,228
 $4,287
 $7,941
 
____________________
(1)This increase in expense is entirely offset by a corresponding increase in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income, net” on our consolidated statements of income.



68


Results of Operations – Three Months Ended September 30, 2017 Compared to September 30, 2016 - continued

(Loss) Income from Partially Owned Entities
Summarized belowBelow are the components of (loss) income from partially owned entities for the three months ended September 30, 2017 and 2016.entities.
(Amounts in thousands, except per share amounts)
Percentage
Ownership at
 For the Three Months Ended September 30,
 September 30, 2017 2017 2016
Our Share of Net (Loss) Income:     
Pennsylvania Real Estate Investment Trust ("PREIT")(1)
8.0% $(49,748) $52
Alexander's32.4% 7,845
 8,785
Urban Edge Properties ("UE")(2)
4.5% 6,008
 2,158
Partially owned office buildings/land (3)
Various (5,551) (8,642)
Other investments(4)
Various (355) 1,458
   $(41,801) $3,811
(Amounts in thousands)Percentage Ownership at March 31, 2023For the Three Months Ended March 31,
20232022
Our share of net income (loss):
Fifth Avenue and Times Square JV:
Equity in net income51.5%$10,199 $16,309 
Return on preferred equity, net of our share of the expense9,226 9,226 
19,425 25,535 
Partially owned office buildings(1)
Various(8,963)1,292 
Alexander's Inc.32.4%4,744 5,691 
Other investments(2)
Various1,460 1,196 
$16,666 $33,714 
____________________
(1)
(1)Includes interests in 280 Park Avenue, 650 Madison Avenue, 7 West 34th Street, 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.
(2)Includes interests in Independence Plaza, Rosslyn Plaza and others.
Based on PREIT’s September 29, 2017 quarter ended closing share price of $10.49, the market value (“fair value” pursuant to ASC Topic 323, Investments - Equity Method and Joint Ventures) of our investment in PREIT was $65,563 or $44,465 below the carrying amount on our consolidated balance sheet. We have concluded that our investment in PREIT is “other-than-temporarily” impaired and recorded a $44,465 non-cash impairment loss on our consolidated statements of income. Our conclusion was based on a sustained trading value of PREIT stock below our carrying amount and our inability to forecast a recovery in the near-term.
(2)2017 includes a $5,200 net gain resulting from UE operating partnership unit issuances.
(3)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others.
(4)Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, Toys "R" Us, Inc., and others.

(Loss) Income from Real Estate Fund Investments
Below are the componentsis a summary of the (loss) income from our real estate fund investments for the three months ended September 30, 2017Vornado Capital Partners Real Estate Fund (“the Fund”) and 2016.the Crowne Plaza Times Square Hotel Joint Venture.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Previously recorded unrealized loss on exited investments$247,575 $— 
Realized loss on exited investments(247,575)— 
Net investment (loss) income(19)2 
Net unrealized income on held investments— 5,672 
(Loss) income from real estate fund investments(19)5,674 
Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries239 (3,964)
Income from real estate fund investments net of noncontrolling interests in consolidated subsidiaries$220 $1,710 
(Amounts in thousands)For the Three Months Ended September 30,
 2017 2016
Net investment income$6,028
 $5,841
Net realized gains on exited investments35,620
 —
Previously recorded unrealized gains on exited investment(36,736) —
Net unrealized loss on held investments(11,220) (4,764)
(Loss) income from real estate fund investments(6,308) 1,077
Less income attributable to noncontrolling interests in consolidated subsidiaries(1,486) (270)
(Loss) income from real estate fund investments attributable to the Operating Partnership (1)
(7,794) 807
Less loss (income) attributable to noncontrolling interests in the Operating Partnership485
 (49)
(Loss) income from real estate fund investments attributable to Vornado$(7,309) $758
____________________
(1)Excludes $744 and $804 of management and leasing fees for the three months ended September 30, 2017 and 2016, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Interest and Other Investment Income, netNet

InterestThe following table sets forth the details of interest and other investment income, net, was $9,306,000net.
(Amounts in thousands)For the Three Months Ended March 31,
20232022
Interest on cash and cash equivalents and restricted cash$5,674 $64 
Amortization of discount on investments in U.S. Treasury bills3,445 129 
Interest on loans receivable484 825 
$9,603 $1,018 
Interest and Debt Expense
Interest and debt expense for the three months ended September 30, 2017,March 31, 2023 was $86,237,000 compared to $6,459,000 in$52,109,000 for the prior year’s quarter, an increase of $2,847,000.$34,128,000. This increase resultedwas primarily due to (i) $40,138,000 of higher interest expense resulting from an increase in the valuehigher average interest rates on our debt partially offset by (ii) $5,337,000 of investments in our deferred compensation plan (offset by a corresponding decrease in the liability for plan assets in general and administrative expenses).

Interest and Debt Expense

Interesthigher capitalized interest and debt expense was $85,068,000expense.
Net Gains on Disposition of Wholly Owned and Partially Owned Assets
Net gains on disposition of wholly owned and partially owned assets for the three months ended September 30, 2017,March 31, 2023 were $7,520,000 resulting from the sale of a condominium unit at 220 CPS. Net gains on disposition of wholly owned and partially owned assets for the three months ended March 31, 2022 were $6,552,000, comprised of $6,001,000 from the sale of one 220 CPS condominium unit and $551,000 from the sale of two Manhattan retail properties located at 478-482 Broadway and 155 Spring Street.
Income Tax Expense
Income tax expense for the three months ended March 31, 2023 was $4,667,000 compared to $79,721,000 in$7,411,000 for the prior year’s quarter, an increasea decrease of $5,347,000.$2,744,000. This increase was primarily due to (i) $8,533,000 of higher interestlower income tax expense relating toincurred by our variable rate loans, (ii) $2,093,000 of higher interest expense from the refinancing of 350 Park Avenue and the $375,000,000 drawn on our $750,000,000 delayed draw term loan, (iii) $1,351,000 of higher interest expense from the 1535 Broadway capital lease obligation, partially offset by (iv) $4,751,000 higher capitalized interest and debt expense and (v) $2,137,000 of interest savings from the refinancing of theMART.

taxable REIT subsidiaries.

50
69



Results of Operations – Three Months Ended September 30, 2017March 31, 2023 Compared to September 30, 2016March 31, 2022 - continued

Income Tax Expense

For the three months ended September 30, 2017, income tax expense was $1,188,000, compared to $4,563,000 for the prior year’s quarter, a decrease of $3,375,000.  This decrease was primarily due to our right this year to offset certain tax losses against certain taxable income of our taxable REIT subsidiaries.

(Loss) Income from Discontinued Operations

The table below sets forth the combined results of operations of assets related to discontinued operations for the three months ended September 30, 2017 and 2016, substantially all of which is related to our former Washington, DC business which was spun-off on July 17, 2017.
(Amounts in thousands)For the Three Months Ended September 30,
 2017 2016
Total revenues$25,747
 $134,912
Total expenses21,708
 109,506
 4,039
 25,406
JBG SMITH Properties spin-off transaction costs(53,581) (2,739)
Net gains on sale of real estate and a lease position1,530
 2,864
Income from partially owned assets93
 316
Impairment losses—
 (465)
Pretax (loss) income from discontinued operations(47,919) 25,382
Income tax expense(11) (302)
(Loss) income from discontinued operations$(47,930) $25,080


Net IncomeLoss (Income) Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net incomeloss attributable to noncontrolling interests in consolidated subsidiaries was $4,022,000$9,928,000 for the three months ended September 30, 2017,March 31, 2023, compared to $3,658,000net income of $9,374,000 for the prior year’s quarter, an increasea decrease in income of $364,000.$19,302,000. This increase resulted primarily from highera net income allocatedloss in the first quarter of 2023 subject to allocation to the noncontrolling interests including noncontrolling interests of our real estate fund investments.non-wholly owned consolidated subsidiaries compared to net income in the first quarter of 2022.

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

Net lossincome attributable to noncontrolling interests in the Operating Partnership was $1,878,000$429,000 for the three months ended September 30, 2017,March 31, 2023, compared to net income attributable to noncontrolling interests of $4,366,000$1,994,000 for the prior year’s quarter, a decrease in income of $6,244,000.$1,565,000. This decrease resulted primarily from lower net income subject to allocation to Class A unitholders.

Preferred Share Dividends of Vornado Realty Trust
Preferred share dividends were $16,128,000$15,529,000 for the three months ended September 30, 2017, compared to $19,047,000 for the prior year’s quarter, a decrease of $2,919,000.  The decrease is primarily due to the redemption of the 6.875% Series J cumulative redeemable preferred shares on September 1, 2016.


70


Results of Operations – Three Months Ended September 30, 2017 Compared to September 30, 2016 - continued

March 31, 2023 and 2022.
Preferred Unit Distributions of Vornado Realty L.P.
Preferred unit distributions were $16,176,000$15,558,000 for the three months ended September 30, 2017, compared to $19,096,000 for the prior year’s quarter, a decrease of $2,920,000.  The decrease is primarily due to the redemption of the 6.875% Series J cumulative redeemable preferred units on September 1, 2016.March 31, 2023 and 2022.

Same Store EBITDA and Same Store NOINet Operating Income At Share
Same store EBITDA and same store NOI at share represents EBITDA and NOI at share from property-level operations which are owned by us and in service in both the current and prior year reporting periods. Same store EBITDA excludes segment-level overhead expenses, which are expenses that we do not considerNOI at share - cash basis is same store NOI at share adjusted to be property-level expenses.exclude straight-line rental income and expense, amortization of acquired below and above market leases, net and other non-cash adjustments. We present these non-GAAP measures to (i) facilitate meaningful comparisons of the operational performance of our properties and segments, (ii) make decisions on whether to buy, sell or refinance properties, and (iii) compare the performance of our properties and segments to those of our peers. Same store EBITDANOI at share and same store NOI at share - cash basis should not be considered as an alternativealternatives to net income or cash flow from operations and may not be comparable to similarly titled measures employed by other companies.

Below are reconciliations of EBITDANOI at share to same store EBITDANOI at share for our New York segment, and theMART andTHE MART, 555 California Street which are included in Other,and other investments for the three months ended September 30, 2017March 31, 2023 compared to September 30, 2016.March 31, 2022.
(Amounts in thousands)TotalNew YorkTHE MART555 California StreetOther
NOI at share for the three months ended March 31, 2023$273,483 $235,994 $15,409 $16,929 $5,151 
Less NOI at share from:
Dispositions134 134 — — — 
Development properties(7,545)(7,545)— — — 
Other non-same store (income) expense, net(1,487)3,664 — — (5,151)
Same store NOI at share for the three months ended March 31, 2023$264,585 $232,247 $15,409 $16,929 $— 
NOI at share for the three months ended March 31, 2022$284,258 $243,667 $19,914 $16,235 $4,442 
Less NOI at share from:
Dispositions(3,232)(3,232)— — — 
Development properties(7,440)(7,440)— — — 
Other non-same store income, net(8,918)(4,476)— — (4,442)
Same store NOI at share for the three months ended March 31, 2022$264,668 $228,519 $19,914 $16,235 $— 
(Decrease) increase in same store NOI at share$(83)$3,728 $(4,505)$694 $— 
% (decrease) increase in same store NOI at share0.0 %1.6 %(22.6)%4.3 %0.0 %
51
(Amounts in thousands)New York theMART 
555 California
Street
EBITDA for the three months ended September 30, 2017$297,177
 $24,165
 $11,643
 Add-back:     
 Non-property level overhead expenses included above9,479
 1,859
 —
 Less EBITDA from:     
 Acquisitions(5,454) 42
 —
 Dispositions(15) —
 —
 Development properties placed into and out of service(6,228) —
 —
 Other non-operating income, net(1,076) —
 —
Same store EBITDA for the three months ended September 30, 2017$293,883
 $26,066
 $11,643
      
EBITDA for the three months ended September 30, 2016$276,893
 $21,696
 $11,405
 Add-back:     
 Non-property level overhead expenses included above9,783
 1,720
 55
 Less EBITDA from:     
 Acquisitions(205) —
 —
 Dispositions19
 —
 —
 Development properties placed into and out of service(7,967) —
 226
 Other non-operating loss (income), net1,285
 —
 (239)
Same store EBITDA for the three months ended September 30, 2016$279,808
 $23,416
 $11,447
      
Increase in same store EBITDA for the three months ended September 30, 2017 compared to September 30, 2016$14,075
 $2,650
 $196
       
% increase in same store EBITDA5.0%
(1) 
11.3% 1.7%
____________________
(1)Excluding Hotel Pennsylvania, same store EBITDA increased by 4.5%.


71



Results of Operations – Three Months Ended September 30, 2017March 31, 2023 Compared to September 30, 2016March 31, 2022 - continued

Same Store Net Operating Income At Share - continued
Below are reconciliations of NOI at share - cash basis to same store NOI at share - cash basis for our New York segment, and theMART andTHE MART, 555 California Street which are included in Other,and other investments for the three months ended September 30, 2017March 31, 2023 compared to September 30, 2016.March 31, 2022.

(Amounts in thousands)TotalNew YorkTHE MART555 California StreetOther
NOI at share - cash basis for the three months ended March 31, 2023$278,535 $241,027 $14,675 $17,718 $5,115 
Less NOI at share - cash basis from:
Dispositions134 134 — — — 
Development properties(6,770)(6,770)— — — 
Other non-same store income, net(6,070)(955)— — (5,115)
Same store NOI at share - cash basis for the three months ended March 31, 2023$265,829 $233,436 $14,675 $17,718 $— 
NOI at share - cash basis for the three months ended March 31, 2022$281,128 $239,692 $20,436 $16,360 $4,640 
Less NOI at share - cash basis from:
Dispositions(3,252)(3,252)— — — 
Development properties(6,756)(6,756)— — — 
Other non-same store income, net(9,332)(4,692)— — (4,640)
Same store NOI at share - cash basis for the three months ended March 31, 2022$261,788 $224,992 $20,436 $16,360 $— 
Increase (decrease) in same store NOI at share - cash basis$4,041 $8,444 $(5,761)$1,358 $— 
% increase (decrease) in same store NOI at share - cash basis1.5 %3.8 %(28.2)%8.3 %0.0 %
52
(Amounts in thousands)New York theMART 
555 California
Street
NOI for the three months ended September 30, 2017$280,044
 $25,422
 $11,013
 Less NOI from:     
 Acquisitions(3,682) 42
 —
 Dispositions(15) —
 —
 Development properties placed into and out of service(1,779) —
 —
 Other non-operating income, net(6,022) —
 —
Same store NOI for the three months ended September 30, 2017$268,546
 $25,464
 $11,013
       
NOI for the three months ended September 30, 2016$246,588
 $21,758
 $9,899
 Less NOI from:     
 Dispositions19
 —
 —
 Development properties placed into and out of service(1,950) —
 226
 Other non-operating income, net(8,769) —
 (397)
Same store NOI for the three months ended September 30, 2016$235,888
 $21,758
 $9,728
      
Increase in same store NOI for the three months ended September 30, 2017 compared to September 30, 2016$32,658
 $3,706
 $1,285
      
% increase in same store NOI13.8%
(1) 
17.0% 13.2%
____________________
(1)Excluding Hotel Pennsylvania, same store NOI increased by 13.4%.


72


Net Income, EBITDA and NOI by Segment for the Nine Months Ended September 30, 2017 and 2016

As a result of the spin-off of our Washington, DC segment, effective July 1, 2017, the Washington, DC segment has been reclassified to the Other segment. We have also reclassified the prior period segment financial results to conform to the current period presentation.
Below is a summary of net income (loss) and a reconciliation of net income (loss) to EBITDA(1) and NOI(1) by segment for the nine months ended September 30, 2017.
(Amounts in thousands)For the Nine Months Ended September 30, 2017 
 Total New York Other 
Total revenues$1,547,900
 $1,316,710
 $231,190
 
Total expenses1,100,042
 845,632
 254,410
 
Operating income (loss)447,858
 471,078
 (23,220) 
Income (loss) from partially owned entities5,578
 (954) 6,532
 
Loss from real estate fund investments(1,649) —
 (1,649) 
Interest and other investment income, net27,800
 4,384
 23,416
 
Interest and debt expense(252,581) (179,851) (72,730) 
Net gain on disposition of wholly owned and partially owned assets501
 —
 501
 
Income (loss) before income taxes227,507
 294,657
 (67,150) 
Income tax expense(2,429) (324) (2,105) 
Income (loss) from continuing operations225,078
 294,333
 (69,255) 
Loss from discontinued operations(14,501) —
 (14,501) 
Net income (loss)210,577
 294,333
 (83,756) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(18,436) (8,041) (10,395) 
Net income (loss) attributable to the Operating Partnership192,141
 286,292
 (94,151) 
Interest and debt expense(2)
348,350
 239,032
 109,318
 
Depreciation and amortization(2)
476,406
 328,058
 148,348
 
Income tax expense(2)
4,180
 540
 3,640
 
EBITDA(1)
1,021,077
 853,922
(3) 
167,155
(4) 
General and administrative expenses less $5,233 mark-to-market of our deferred compensation plan131,365
 31,630
 99,735
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(73,125) (58,797) (14,328) 
Acquisition and transaction related costs, including $67,045 for the spin-off of JBGS68,118
 —
 68,118
 
Impairment loss on investment in PREIT44,465
 —
 44,465
 
Net gains on sale of real estate and other(2)
(21,507) —
 (21,507) 
Net gains resulting from UE operating partnership unit issuances(21,100) —
 (21,100) 
Our share of net realized/unrealized losses from our real estate fund investments18,802
 —
 18,802
 
Net gain on repayment of our Suffolk Downs JV debt investments(11,373) —
 (11,373) 
Real estate impairment losses(2)
7,572
 —
 7,572
 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(35,511) (35,511) —
 
Dividends received from Alexander's21,090
 21,090
 —
 
Our share of PREIT EBITDA(15,439) —
 (15,439) 
Distributions received from PREIT3,929
 —
 3,929
 
Our share of UE EBITDA (excluding management fees)(9,694) —
 (9,694) 
Distributions received from UE3,773
 —
 3,773
 
NOI(1)
$1,132,442
 $812,334
(3) 
$320,108
(4) 
____________________
See notes on pages 75 through 76.


73


Net Income, EBITDA and NOI by Segment for the Nine Months Ended September 30, 2017 and 2016 - continued

Below is a summary of net income (loss) and a reconciliation of net income (loss) to EBITDA(1) and NOI(1) by segment for the nine months ended September 30, 2016.
(Amounts in thousands)For the Nine Months Ended September 30, 2016 
 Total New York Other 
Total revenues$1,489,768
 $1,269,464
 $220,304
 
Total expenses1,062,219
 818,419
 243,800
 
Operating income (loss)427,549
 451,045
 (23,496) 
Income (loss) from partially owned entities3,892
 (5,143) 9,035
 
Income from real estate fund investments28,750
 —
 28,750
 
Interest and other investment income, net20,121
 3,684
 16,437
 
Interest and debt expense(250,034) (162,193) (87,841) 
Net gains on disposition of wholly owned and partially owned assets160,225
 159,511
 714
 
Income (loss) before income taxes390,503
 446,904
 (56,401) 
Income tax expense(8,921) (4,131) (4,790) 
Income (loss) from continuing operations381,582
 442,773
 (61,191) 
Loss from discontinued operations(104,204) —
 (104,204) 
Net income (loss)277,378
 442,773
 (165,395) 
Less net income attributable to noncontrolling interests in consolidated subsidiaries(26,361) (9,811) (16,550) 
Net income (loss) attributable to the Operating Partnership251,017
 432,962
 (181,945) 
Interest and debt expense(2)
376,898
 208,683
 168,215
 
Depreciation and amortization(2)
521,143
 331,448
 189,695
 
Income tax expense(2)
13,067
 4,424
 8,643
 
EBITDA(1)
1,162,125
 977,517
(3) 
184,608
(4) 
Net gains on sale of real estate and other(2)
(168,140) (159,511) (8,629) 
Real estate impairment losses(2)
166,701
 —
 166,701
 
Non-cash adjustments for straight-line rental income and expense and amortization of acquired below and above market leases, net(2)
(152,023) (114,217) (37,806) 
General and administrative expenses less $2,625 mark-to-market of our deferred compensation plan132,085
 27,557
 104,528
 
Acquisition and transaction related costs, including $4,597 for the spin-off of JBGS11,319
 —
 11,319
 
Our share of net realized/unrealized gains from our real estate fund investments(8,741) —
 (8,741) 
Our share of Alexander's EBITDA (excluding management, leasing and development fees)(34,880) (34,880) —
 
Dividends received from Alexander's19,849
 19,849
 —
 
Our share of PREIT EBITDA(8,537) —
 (8,537) 
Distributions received from PREIT3,906
 —
 3,906
 
Our share of UE EBITDA (excluding management fees)(7,539) —
 (7,539) 
Distributions received from UE3,430
 —
 3,430
 
NOI(1)
$1,119,555
 $716,315
(3) 
$403,240
(4) 
____________________
See notes on the following pages.



74


Net Income, EBITDA and NOI by Segment for the Nine Months Ended September 30, 2017 and 2016 - continued

Notes to preceding tabular information:

(1)
EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization."  NOI represents "Net Operating Income" on a cash basis. We calculate EBITDA and NOI on an Operating Partnership basis which is before allocation to the noncontrolling interest of the Operating Partnership.  We consider EBITDA the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. We also consider NOI a key non-GAAP financial measure. NOI is before general and administrative expenses, straight-line rental income and expense, amortization of acquired below and above market leases, net, acquisition and transaction related costs, our share of net realized and unrealized gains or losses from our real estate fund investments, impairment losses and gains on disposal of assets. As properties are bought and sold based on a multiple of NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to those of our peers. EBITDA and NOI should not be considered substitutes for net income. EBITDA and NOI may not be comparable to similarly titled measures employed by other companies.

Our 7.5% interest in Fashion Centre Mall/Washington Tower and our interest in Rosslyn Plaza (ranging from 43.7% to 50.4%) were not included in the spin-off of our Washington, DC segment and have been reclassified to Other. The prior year's presentation has been conformed to the current year.  In addition, on January 1, 2017, we reclassified our investment in 85 Tenth Avenue from Other to the New York segment as a result of the December 1, 2016 repayment of our loans receivable and the receipt of a 49.9% ownership interest in the property. 

(2)
Adjustments include our proportionate share of partially owned entities and give effect to noncontrolling interest's share of consolidated subsidiaries.

(3)The elements of "New York" EBITDA are summarized below.
 (Amounts in thousands)For the Nine Months Ended
September 30,		 
  2017 2016 
 Office$522,566
 $484,735
(a) 
 Retail269,762
 272,083
(a) 
 Residential18,450
 18,901
 
 Alexander's35,511
 34,880
 
 Hotel Pennsylvania7,633
 4,287
 
 Total New York EBITDA, as adjusted853,922
 814,886
 
 Certain items that impact EBITDA    
 Net gain on sale of 47% ownership interest in 7 West 34th Street—
 159,511
 
 EBITDA from sold properties—
 3,120
 
 Total of certain items that impact EBITDA—
 162,631
 
 Total of New York EBITDA$853,922
 $977,517
 

The elements of "New York" NOI are summarized below.
 (Amounts in thousands)For the Nine Months Ended September 30, 
  2017 2016 
 Office$523,531
 $459,509
(a) 
 Retail241,667
 211,611
(a) 
 Residential16,300
 16,724
 
 Alexander's21,090
 19,849
 
 Hotel Pennsylvania9,746
 6,390
 
 Total New York NOI, as adjusted812,334
 714,083
 
 NOI from sold properties—
 2,232
 
 Total New York NOI$812,334
 $716,315
 
_____________________
(a)Beginning in January 2017 for office buildings with retail at the base, we have adjusted the allocation of real estate taxes between the retail and office elements above. This has no effect on our consolidated financial statements but resulted in a reallocation of $12,058 of income from retail to office for the nine months ended September 30, 2016.



75


Net Income, EBITDA and NOI by Segment for the Nine Months Ended September 30, 2017 and 2016 - continued

Notes to preceding tabular information - continued:

(4)The elements of "Other" EBITDA are summarized below.
 (Amounts in thousands)For the Nine Months Ended September 30,
  2017 2016
 theMART (including trade shows)$72,471
 $70,689
 555 California Street35,870
 35,137
 Other investments36,318
 57,092
 
Corporate general and administrative expenses(a)
(78,952) (76,364)
 
Investment income and other, net(a)
24,079
 19,317
 Other EBITDA, as adjusted89,786
 105,871
 Certain items that impact EBITDA:   
 JBG SMITH Properties which is treated as a discontinued operation:   
 Transaction costs(67,045) (4,597)
 Operating results through July 17, 2017 spin-off153,449
 214,604
  86,404
 210,007
 Impairment loss on investment in Pennsylvania REIT(44,465) —
 (Loss) income from real estate fund investments, net(11,333) 13,662
 Net gain resulting from Urban Edge Properties operating partnership unit issuances21,100
 —
 Our share of net gain on sale of Suffolk Downs15,314
 —
 Net gain on repayment of Suffolk Downs JV debt investments11,373
 —
 Skyline properties impairment loss—
 (160,700)
 Other(1,024) 15,768
 Total of certain items that impact EBITDA77,369
 78,737
 Other EBITDA$167,155
 $184,608
The elements of "Other" NOI are summarized below.
 (Amounts in thousands)For the Nine Months Ended September 30,
  2017 2016
 theMART (including trade shows)$74,859
 $70,914
 555 California Street33,647
 24,010
 Other investments15,138
 44,482
 
Investment income and other, net(a)
24,079
 19,317
 Other NOI, as adjusted147,723
 158,723
 Certain items that impact NOI:   
 JBG SMITH Properties operating results through July 17, 2017 spin-off160,634
 233,310
 Our share of real estate fund investments7,469
 6,313
 Other4,282
 4,894
 Total of certain items that impact EBITDA172,385
 244,517
 Other NOI$320,108
 $403,240

(a)The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $5,233 and $2,625 of income for the nine months ended September 30, 2017 and 2016, respectively.

EBITDA by Region

Below is a summary of the percentages of EBITDA by geographic region, excluding gains on sale of real estate, non-cash impairment losses and operations of sold properties.
 For the Nine Months Ended September 30,
 2017 2016
Region:   
New York City metropolitan area88% 88%
Chicago, IL8% 8%
San Francisco, CA4% 4%
 100%
100%


76


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016

Revenues
Our revenues, which consist of property rentals, tenant expense reimbursements, and fee and other income, were $1,547,900,000 for the nine months ended September 30, 2017, compared to $1,489,768,000 for the prior year’s nine months, an increase of $58,132,000.  Below are the details of the increase by segment:
(Amounts in thousands)Total New York Other
Increase (decrease) due to:     
Property rentals:     
 Acquisitions, dispositions and other$8,399
 $8,173
 $226
 Development and redevelopment689
 (64) 753
 Hotel Pennsylvania6,218
 6,218
 —
 Trade shows1,684
 —
 1,684
 Same store operations19,704
 13,628
 6,076
  36,694
 27,955
 8,739
Tenant expense reimbursements:     
 Acquisitions, dispositions and other(2,673) (2,673) —
 Development and redevelopment1,672
 (37) 1,709
 Same store operations12,261
 10,916
 1,345
  11,260
 8,206
 3,054
Fee and other income:     
 BMS cleaning fees7,267
 9,577
 (2,310)
 Management and leasing fees1,690
 1,453
 237
 Lease termination fees(1,177) (615) (562)
 Other income2,398
 670
 1,728
  10,178
 11,085
 (907)
       
Total increase in revenues$58,132
 $47,246
 $10,886




77


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016 - continued

Expenses
Our expenses, which consist of operating, depreciation and amortization, general and administrative expenses and acquisition and transaction related costs, were $1,100,042,000 for the nine months ended September 30, 2017, compared to $1,062,219,000 for the prior year’s nine months, an increase of $37,823,000.  Below are the details of the increase by segment:
(Amounts in thousands)Total New York Other 
(Decrease) increase due to:      
Operating:      
 Acquisitions, dispositions and other$(3,784) $(3,784) $—
 
 Development and redevelopment843
 72
 771
 
 Non-reimbursable expenses, including bad debt reserves(3,463) (4,311) 848
 
 Hotel Pennsylvania2,874
 2,874
 —
 
 Trade shows361
 —
 361
 
 BMS expenses6,900
 9,118
 (2,218) 
 Same store operations31,308
 23,288
 8,020
 
  35,039
 27,257
 7,782
 
Depreciation and amortization:      
 Acquisitions, dispositions and other(175) (175) —
 
 Development and redevelopment(349) (24) (325) 
 Same store operations(636) (3,918) 3,282
 
  (1,160) (4,117) 2,957
 
General and administrative:      
 Mark-to-market of deferred compensation plan liability2,608
 —
 2,608
(1) 
 Same store operations6,960
 4,073
 2,887
 
  9,568
 4,073
 5,495
 
        
Acquisition and transaction related costs(5,624) —
 (5,624) 
       
Total increase in expenses$37,823
 $27,213
 $10,610
 
____________________
(1)This increase in expense is entirely offset by a corresponding increase in income from the mark-to-market of the deferred compensation plan assets, a component of “interest and other investment income, net” on our consolidated statements of income.


78


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016 - continued

Income from Partially Owned Entities

Summarized below are the components of income from partially owned entities for the nine months ended September 30, 2017 and 2016.
(Amounts in thousands, except per share amounts)
Percentage
Ownership at
 For the Nine Months Ended September 30,
 September 30, 2017 2017 2016
Our Share of Net (Loss) Income:     
PREIT(1)
8.0% $(53,480) $(4,763)
UE(2)
4.5% 26,311
 4,523
Alexander's32.4% 24,443
 25,947
Partially owned office buildings/land (3)
Various (23,508) (29,882)
Other investments(4)
Various 31,812
 8,067
    $5,578
 $3,892
____________________
(1)
Based on PREIT’s September 29, 2017 quarter ended closing share price of $10.49, the market value (“fair value” pursuant to ASC Topic 323, Investments - Equity Method and Joint Ventures) of our investment in PREIT was $65,563 or $44,465 below the carrying amount on our consolidated balance sheet. We have concluded that our investment in PREIT is “other-than-temporarily” impaired and recorded a $44,465 non-cash impairment loss on our consolidated statements of income. Our conclusion was based on a sustained trading value of PREIT stock below our carrying amount and our inability to forecast a recovery in the near-term.
(2)2017 includes a $21,100 net gain resulting from UE operating partnership unit issuances.
(3)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others.
(4)Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, Toys "R" Us, Inc., and others. In the second quarter of 2017, we recognized $26,687 of net gains, comprised of $15,314 representing our share of a net gain on the sale of Suffolk Downs and $11,373 representing the net gain on repayment of our debt investments in Suffolk Downs JV.  See page 58 for details.

(Loss) Income from Real Estate Fund Investments

Below are the components of the (loss) income from our real estate fund investments for the nine months ended September 30, 2017 and 2016.
(Amounts in thousands)For the Nine Months Ended September 30,
 2017 2016
Net investment income$16,888
 $12,237
Net realized gains on exited investments35,861
 14,676
Previously recorded unrealized gains on exited investment(25,538) (14,254)
Net unrealized (loss) gain on held investments(28,860) 16,091
(Loss) income from real estate fund investments(1,649) 28,750
Less income attributable to noncontrolling interests in consolidated subsidiaries(9,684) (15,088)
(Loss) income from real estate fund investments attributable to the Operating Partnership (1)
(11,333) 13,662
Less loss (income) attributable to noncontrolling interests in the Operating Partnership706
 (843)
(Loss) income from real estate fund investments attributable to Vornado$(10,627) $12,819
____________________
(1)Excludes $3,125 and $2,499 of management and leasing fees for the nine months ended September 30, 2017 and 2016, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.

Interest and Other Investment Income, net

Interest and other investment income, net, was $27,800,000 for the nine months ended September 30, 2017, compared to $20,121,000 for the prior year’s nine months, an increase of $7,679,000.  This increase resulted primarily from an increase in the value of investments in our deferred compensation plan (offset by a corresponding decrease in the liability for plan assets in general and administrative expenses).


79


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016 - continued

Interest and Debt Expense

Interest and debt expense was $252,581,000 for the nine months ended September 30, 2017, compared to $250,034,000 for the prior year’s nine months, an increase of $2,547,000.  This increase was primarily due to (i) $13,545,000 of higher interest expense relating to our variable rate loans (ii) $6,056,000 higher interest expense from the refinancing of 350 Park Avenue and the $375,000,000 drawn on our $750,000,000 delayed draw term loan, (iii) $4,488,000 of higher interest expense from the 1535 Broadway capital lease obligation, partially offset by (iv) $13,469,000 higher capitalized interest and debt expense, and (v) $8,626,000 of interest savings from the refinancing of theMART.

Income Tax Expense

For the nine months ended September 30, 2017, income tax expense was $2,429,000, compared to $8,921,000 for the prior year’s nine months, a decrease of $6,492,000. This decrease was primarily due to our right this year to offset certain tax losses against certain taxable income of our taxable REIT subsidiaries.

Loss from Discontinued Operations
The table below sets forth the combined results of operations of assets related to discontinued operations for the nine months ended September 30, 2017 and 2016, substantially all of which is related to our former Washington, DC business which was spun-off on July 17, 2017.
(Amounts in thousands)For the Nine Months Ended September 30,
 2017 2016
Total revenues$260,969
 $392,108
Total expenses211,930
 331,377
 49,039
 60,731
JBG SMITH Properties spin-off transaction costs(67,045) (4,597)
Net gains on sale of real estate and a lease position3,797
 5,074
Income (loss) from partially owned assets435
 (3,363)
Impairment losses—
 (161,165)
Pretax loss from discontinued operations(13,774) (103,320)
Income tax expense(727) (884)
Loss from discontinued operations$(14,501) $(104,204)

Net Income Attributable to Noncontrolling Interests in Consolidated Subsidiaries

Net income attributable to noncontrolling interests in consolidated subsidiaries was $18,436,000 for the nine months ended September 30, 2017, compared to $26,361,000 for the prior year’s nine months, a decrease of $7,925,000.  This decrease resulted primarily from lower net income allocated to the noncontrolling interests, including noncontrolling interests of our real estate fund investments.

Net Income Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)

Net income attributable to noncontrolling interests in the Operating Partnership was $9,057,000 for the nine months ended September 30, 2017, compared to $11,410,000 for the prior year’s nine months, a decrease of $2,353,000. This decrease resulted primarily from lower net income subject to allocation to Class A unitholders.

Preferred Share Dividends of Vornado Realty Trust

Preferred share dividends were $48,386,000 for the nine months ended September 30, 2017, compared to $59,774,000 for the prior year’s nine months, a decrease of $11,388,000.  This decrease resulted primarily from the redemption of the 6.875% Series J cumulative redeemable preferred shares on September 1, 2016.


80


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016 - continued


Preferred Unit Distributions of Vornado Realty L.P.

Preferred unit distributions were $48,531,000 for the nine months ended September 30, 2017, compared to $59,920,000 for the prior year’s nine months, a decrease of $11,389,000.  This decrease resulted primarily from the redemption of the 6.875% Series J cumulative redeemable preferred units on September 1, 2016.

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

Below are reconciliations of EBITDA to same store EBITDA for our New York segment and theMART and 555 California Street, which are included in Other, for the nine months ended September 30, 2017 compared to September 30, 2016.
(Amounts in thousands)New York theMART 
555 California
Street
EBITDA for the nine months ended September 30, 2017$853,922
 $72,471
 $35,870
 Add-back:     
 Non-property level overhead expenses included above31,630
 5,632
 —
 Less EBITDA from:     
 Acquisitions(15,211) 210
 —
 Dispositions(619) —
 —
 Development properties placed into and out of service(18,966) —
 —
 Other non-operating income, net(3,963) (19) —
Same store EBITDA for the nine months ended September 30, 2017$846,793
 $78,294
 $35,870
      
EBITDA for the nine months ended September 30, 2016$977,517
 $70,689
 $35,137
 Add-back:     
 Non-property level overhead expenses included above27,557
 5,064
 244
 Less EBITDA from:     
 Acquisitions(60) —
 —
 Dispositions, including net gains on sale(162,512) —
 —
 Development properties placed into and out of service(24,343) —
 782
 Other non-operating loss (income), net6,424
 —
 (238)
Same store EBITDA for the nine months ended September 30, 2016$824,583
 $75,753
 $35,925
      
Increase (decrease) in same store EBITDA for the nine months ended September 30, 2017 compared to September 30, 2016$22,210
 $2,541
 $(55)
      
% increase (decrease) in same store EBITDA2.7%
(1) 
3.4%
(2) 
(0.2)%
____________________
(1)Excluding Hotel Pennsylvania, same store EBITDA increased by 2.3%. 
(2)
The nine months ended September 30, 2017 includes a $2,000 reversal of an expense accrued in 2015. Excluding this amount, same store EBITDA increased by 6.2%.



81


Results of Operations – Nine Months Ended September 30, 2017 Compared to September 30, 2016 - continued

Below are reconciliations of NOI to same store NOI for our New York segment and theMART and 555 California Street, which are included in Other, for the nine months ended September 30, 2017 compared to September 30, 2016.

(Amounts in thousands)New York theMART 
555 California
Street
NOI for the nine months ended September 30, 2017$812,334
 $74,859
 $33,647
 Less NOI from:     
 Acquisitions(13,230) 210
 —
 Dispositions(619) —
 —
 Development properties placed into and out of service(5,022) —
 —
 Other non-operating income, net(22,492) (31) —
Same store NOI for the nine months ended September 30, 2017$770,971
 $75,038
 $33,647
      
NOI for the nine months ended September 30, 2016$716,315
 $70,914
 $24,010
 Less NOI from:     
 Acquisitions(13) —
 —
 Dispositions(2,113) —
 —
 Development properties placed into and out of service(5,947) —
 782
 Other non-operating income, net(27,428) —
 (396)
Same store NOI for the nine months ended September 30, 2016$680,814
 $70,914
 $24,396
      
Increase in same store NOI for the nine months ended September 30, 2017 compared to September 30, 2016$90,157
 $4,124
 $9,251
       
% increase in same store NOI13.2%
(1) 
5.8%
(2) 
37.9%
____________________
(1)Excluding Hotel Pennsylvania, same store NOI increased by 12.8%.
(2)
The nine months ended September 30, 2017 includes a $2,000 reversal of an expense accrued in 2015. Excluding this amount, same store NOI increased by 8.9%.


82


SUPPLEMENTAL INFORMATION

Reconciliation of Net Income Attributable to the Operating Partnership to EBITDA for the Three Months Ended June 30, 2017
(Amounts in thousands)New York
Net income attributable to the Operating Partnership for the three months ended June 30, 2017$96,180
Interest and debt expense78,202
Depreciation and amortization110,449
Income tax expense(869)
EBITDA for the three months ended June 30, 2017$283,962

Reconciliation of EBITDA to Same Store EBITDA – Three Months Ended September 30, 2017 Compared to June 30, 2017
(Amounts in thousands)New York theMART 
555 California
Street
EBITDA for the three months ended September 30, 2017$297,177
 $24,165
 $11,643
 Add-back:     
 Non-property level overhead expenses included above9,479
 1,859
 —
 Less EBITDA from:     
 Acquisitions(226) 42
 —
 Dispositions(15) —
 —
 Development properties placed into and out of service(6,228) —
 —
 Other non-operating income, net(1,308) —
 —
Same store EBITDA for the three months ended September 30, 2017$298,879
 $26,066
 $11,643
      
EBITDA for the three months ended June 30, 2017$283,962
 $24,122
 $12,144
 Add-back:     
 Non-property level overhead expenses included above9,908
 2,063
 —
 Less EBITDA from:     
 Acquisitions(164) 169
 —
 Dispositions(164) —
 —
 Development properties placed into and out of service(7,571) —
 —
 Other non-operating income, net(900) —
 —
Same store EBITDA for the three months ended June 30, 2017$285,071
 $26,354
 $12,144
      
Increase (decrease) in same store EBITDA for the three months ended September 30, 2017 compared to June 30, 2017$13,808
 $(288) $(501)
      
% increase (decrease) in same store EBITDA4.8%
(1) 
(1.1)% (4.1)%
____________________
(1)Excluding Hotel Pennsylvania, same store EBITDA increased by 5.3%.




83


SUPPLEMENTAL INFORMATION - CONTINUED

Reconciliation of NOI to Same Store NOI – Three Months Ended September 30, 2017 Compared to June 30, 2017
 New York theMART 555 California
Street
NOI for the three months ended September 30, 2017$280,044
 $25,422
 $11,013
 Less NOI from:     
 Acquisitions(76) 42
 —
 Dispositions(15) —
 —
 Development properties placed into and out of service(1,779) —
 —
 Other non-operating income, net(6,247) —
 —
Same store NOI for the three months ended September 30, 2017$271,927
 $25,464
 $11,013
       
NOI for the three months ended June 30, 2017$270,515
 $24,901
 $11,259
 Less NOI from:     
 Acquisitions(63) 170
 —
 Dispositions(164) —
 —
 Development properties placed into and out of service(1,774) —
 —
 Other non-operating income, net(6,773) —
 —
Same store NOI for the three months ended June 30, 2017$261,741
 $25,071
 $11,259
      
Increase (decrease) in same store NOI for the three months ended September 30, 2017 compared to June 30, 2017$10,186
 $393
 $(246)
       
% increase (decrease) in same store NOI3.9%
(1) 
1.6% (2.2)%
____________________
(1)Excluding Hotel Pennsylvania, same store NOI increased by 4.4%.


84



Liquidity and Capital Resources

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

WeAs of March 31, 2023, we have $3.2 billion of liquidity comprised of $1.0 billion of cash and cash equivalents and restricted cash, $277 million of investments in U.S. Treasury bills and $1.9 billion available on our $2.5 billion revolving credit facilities. The ongoing challenges posed by the increase in interest rates and inflation and the continuing effect of the COVID-19 pandemic could adversely impact our cash flow from continuing operations but we anticipate that cash flow from continuing operations over the next twelve months together with cash balances on hand will be adequate to fund our business operations, cash distributions to unitholders of the Operating Partnership, cash dividends to our shareholders, debt amortization and recurring capital expenditures. Capital requirements for development and redevelopment expenditures and acquisitions may require funding from borrowings, equity offerings and/or equity offerings.

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

In April 2023, the Board of Trustees of Vornado authorized the repurchase of up to $200,000,000 of its outstanding common shares.
Summary of Cash Flows for the Nine Months Ended September 30, 2017

Our cashCash and cash equivalents and restricted cash were $1,385,783,000was $1,033,839,000 as of September 30, 2017,March 31, 2023, a $213,548,000 decrease$12,682,000 increase from the balance atas of December 31, 2016.  2022.
Our consolidated outstanding debt, net was $9,351,601,000cash flow activities are summarized as of September 30, 2017, a $95,069,000 decrease from the balance at December 31, 2016.  As of September 30, 2017 and December 31, 2016, $0 and $115,630,000, respectively, was outstanding under our revolving credit facilities.  During the remainder of 2017 and 2018, $0 and $140,015,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it.follows:

(Amounts in thousands)For the Three Months Ended March 31,(Decrease) Increase in Cash Flow
 20232022
Net cash provided by operating activities$91,872 $171,014 $(79,142)
Net cash provided by (used in) investing activities125,654 (794,635)920,289 
Net cash used in financing activities(204,844)(165,475)(39,369)
Net Cash Provided by Operating Activities

Net cash provided by operating activities primarily consists of $661,625,000cash inflows from rental revenues and operating distributions from our unconsolidated partially owned entities less cash outflows for property expenses, general and administrative expenses and interest expense. For the three months ended March 31, 2023, net cash provided by operating activities of $91,872,000 was comprised of (i) net income$157,127,000 of $210,577,000, (ii) $386,488,000 of non-cash adjustments, which include depreciation and amortization expense, the effect of straight-lining of rents, amortization of below-market leases, net, net realized and unrealized losses on real estate fund investments, equity in net incomecash from partially owned entities, net gains on sale of real estate and other and net gains on disposition of wholly owned and partially owned assets, (iii) return of capital from real estate fund investments of $80,294,000 and (iv)operations, including distributions of income from partially owned entities of $65,097,000, partially offset by (v)$38,706,000, and a net decrease of $65,255,000 in cash due to the net changetiming of cash receipts and payments related to changes in operating assets and liabilities of $80,831,000.liabilities.

Net Cash Used in Investing Activities

Net cash used inflow provided by (used in) investing activities is impacted by the timing and extent of $54,295,000 was primarily comprised of (i) $274,716,000 ofour development, costscapital improvement, acquisition and construction in progress, (ii) $207,759,000 of additions to real estate, (iii) $33,578,000 of investments in partially owned entities and (iv) $11,841,000 of acquisitions of real estate and other, partially offsetdisposition activities during the year.
The following table details the net cash provided by (v) $347,776,000 of capital distributions from partially owned entities, (vi) $115,630,000 repayment of loan receivable from JBGS and (vii) $9,543,000 of proceeds from sales of real estate and related investments.(used in) investing activities:

Net Cash Used in Financing Activities

Net cash used in financing activities of Vornado Realty Trust of $820,878,000 was primarily comprised of (i) $416,237,000 of cash and cash equivalents and restricted cash included in the spin-off of JBGS, (ii) $382,552,000 of dividends paid on common shares, (iii) $177,109,000 of repayments of borrowings, (iv) $48,386,000 of dividends paid on preferred shares, (v) $48,329,000 of distributions to noncontrolling interests and (vi) $2,944,000 of debt issuance and other costs, partially offset by (vii) $229,042,000 of proceeds from borrowings and (viii) $25,011,000 of proceeds received from exercise of employee share options.

Net cash used in financing activities of the Operating Partnership of $820,878,000 was primarily comprised of (i) $416,237,000 of cash and cash equivalents and restricted cash included in the spin-off of JBGS, (ii) $382,552,000 of distributions to Vornado, (iii) $177,109,000 of repayments of borrowings, (iv) $48,386,000 of distributions to preferred unitholders, (v) $48,329,000 of distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries and (vi) $2,944,000 of debt issuance and other costs, partially offset by (vii) $229,042,000 of proceeds from borrowings and (viii) $25,011,000 of proceeds received from exercise of Vornado stock options.


(Amounts in thousands)For the Three Months Ended March 31,Increase (Decrease) in Cash Flow
20232022
Proceeds from maturities of U.S. Treasury bills$197,294 $— $197,294 
Development costs and construction in progress(135,550)(209,738)74,188 
Proceeds from repayment of participation in 150 West 34th Street mortgage loan105,000 — 105,000 
Additions to real estate(57,032)(30,900)(26,132)
Proceeds from sale of condominium units at 220 Central Park South14,216 15,095 (879)
Distributions of capital from partially owned entities11,559 — 11,559 
Investments in partially owned entities(8,833)(4,571)(4,262)
Acquisitions of real estate and other(1,000)— (1,000)
Purchase of U.S. Treasury bills— (645,920)645,920 
Proceeds from sales of real estate— 81,399 (81,399)
Net cash provided by (used in) investing activities$125,654 $(794,635)$920,289 

53
85



Liquidity and Capital Resources - continued

Financing Activities
Capital Expenditures forNet cash flow used in financing activities is impacted by the Nine Months Ended September 30, 2017

Capital expenditures consisttiming and extent of expendituresissuances of debt and equity securities, distributions paid to maintain assets, tenant improvement allowancescommon shareholders and leasing commissions.  Recurring capital expenditures include expenditures to maintain a property’s competitive position withinunitholders of the market and tenant improvements and leasing commissions necessary to re-lease expiring leases or renew or extend existing leases.  Non-recurring capital improvements include expenditures to lease space that has been vacant for more than nine months and expenditures completed in the year of acquisition and the following two years that were planned at the time of acquisition,Operating Partnership as well as tenant improvementsprincipal and leasing commissions for space that was vacant atother repayments associated with our outstanding debt.
The following table details the time of acquisition of a property.net cash used in financing activities:

(Amounts in thousands)For the Three Months Ended March 31,(Decrease) Increase in Cash Flow
20232022
Repayments of borrowings$(110,400)$(5,400)$(105,000)
Dividends paid on common shares/Distributions to Vornado(71,950)(101,616)29,666 
Dividends paid on preferred shares/Distributions to preferred unitholders(15,529)(15,529)— 
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries(6,412)(43,545)37,133 
Deferred financing costs(2,798)— (2,798)
Contributions from noncontrolling interests in consolidated subsidiaries2,129 481 1,648 
Proceeds received from exercise of Vornado stock options and other146 219 (73)
Repurchase of shares/Class A units related to stock compensation agreements and related tax withholdings and other(30)(85)55 
Net cash used in financing activities$(204,844)$(165,475)$(39,369)
Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended for the nine months ended September 30, 2017.
(Amounts in thousands)Total New York theMART 
555 California
Street
 Other 
Expenditures to maintain assets$80,195
 $62,199
 $6,202
 $4,601
 $7,193
 
Tenant improvements75,367
 33,251
 7,516
 3,454
 31,146
 
Leasing commissions24,199
 16,690
 1,094
 770
 5,645
 
Non-recurring capital expenditures62,292
 50,717
 988
 6,403
 4,184
 
Total capital expenditures and leasing commissions (accrual basis)242,053
 162,857
 15,800
 15,228
 48,168
 
Adjustments to reconcile to cash basis:          
Expenditures in the current period applicable to
         prior periods
106,038
 62,948
 7,992
 9,777
 25,321
 
Expenditures to be made in future periods for the
         current period
(113,704) (71,138) (7,172) 4,373
 (39,767) 
Total capital expenditures and leasing commissions (cash basis)$234,387
 $154,667
 $16,620
 $29,378
 $33,722
(1) 
Tenant improvements and leasing commissions:          
Per square foot per annum$9.30
 $9.56
 $6.12
 $11.89
 n/a
 
Percentage of initial rent11.1% 10.6% 12.7% 14.9% n/a
 
____________________
(1)Effective July 17, 2017, the date of the spin-off our Washington, DC segment, capital expenditures and leasing commissions by our former Washington, DC segment have been reclassified to the Other segment. We have reclassified the prior period capital expenditures and leasing commissions to conform to the current period presentation.

Development and Redevelopment Expenditures for the Nine Months Ended September 30, 2017

Development and redevelopment expenditures consist of all hard and soft costs associated with the development orand redevelopment of a property, including capitalized interest, debtproperty. We plan to fund these development and redevelopment expenditures from operating costs untilcash flow, existing liquidity, and/or borrowings. See the property is substantially completeddetailed discussion below for our current development and ready for its intended use.  Our development project budgets below include initial leasing costs, which are reflected as non-recurring capital expenditures in the table above.redevelopment projects.

PENN District
PENN 1
We are constructingredeveloping PENN 1, a residential condominium tower containing 397,000 salable2,547,000 square foot office building located on 34th Street between Seventh and Eighth Avenue. In December 2020, we entered into an agreement with the Metropolitan Transportation Authority (the “MTA”) to oversee the redevelopment of the Long Island Rail Road Concourse at Penn Station (the "Concourse"). Skanska USA Civil Northeast, Inc. is performing the redevelopment under a fixed price contract for $396,000,000 which is being funded by the MTA. In connection with the redevelopment, we entered into an agreement with the MTA which will result in the widening of the Concourse to relieve overcrowding and our trading of 15,000 square feet of back of house space for 22,000 square feet of retail frontage space. Vornado's total development cost of our PENN 1 project is estimated to be $450,000,000, of which $384,843,000 of cash has been expended as of March 31, 2023.
PENN 2
We are redeveloping PENN 2, a 1,795,000 square foot (as expanded) office building located on our 220 Central Park South development site.  the west side of Seventh Avenue between 31st and 33rd Street. The incremental development cost of this project is estimated to be approximately $1.3 billion,$750,000,000, of which $811,386,000$452,509,000 of cash has been expended as of September 30, 2017.March 31, 2023.

Hotel Pennsylvania Site
We have permanently closed the Hotel Pennsylvania and plan to develop an office tower on the site. Demolition of the existing building structure commenced in the fourth quarter of 2021.
We are developing a 173,000 square foot Class A office building, located alongalso making districtwide improvements within the western edge of the High Line at 512 West 22nd Street in the West Chelsea submarket of Manhattan (55.0% owned).PENN District. The incremental development cost of this projectthese improvements is estimated to be approximately $130,000,000,$100,000,000, of which our share is $72,000,000.  As$42,098,000 of September 30, 2017, $63,540,000cash has been expended as of which our share is $34,947,000.

We are developing a 170,000 square foot office and retail building at 61 Ninth Avenue, located on the southwest corner of Ninth Avenue and 15th Street in the West Chelsea submarket of Manhattan (45.1% owned). The incremental development cost of this project is estimated to be approximately $152,000,000, of which our share is $69,000,000.  As of September 30, 2017, $93,477,000 has been expended, of which our share is $42,158,000.








86


Liquidity and Capital Resources - continued

Development and Redevelopment Expenditures for the Nine Months Ended September 30, 2017 - continued

We are developing a 34,000 square foot office and retail building at 606 Broadway, located on the northeast corner of Broadway and Houston Street in Manhattan (50.0% owned). The venture’s incremental development cost of this project is estimated to be approximately $60,000,000, of which our share is $30,000,000. As of September 30, 2017, $31,343,000 has been expended, of which our share is $15,672,000.

A joint venture in which we have a 50.1% ownership interest is redeveloping the historic Farley Post Office building which will include a new Moynihan Train Hall and approximately 850,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 120,000 square feet of retail space.  As of September 30, 2017, $259,856,000 has been expended, of which our share is $130,188,000.  The joint venture has also entered into a development agreement with Empire State Development (“ESD”) and a design-build contract with Skanska Moynihan Train Hall Builders.  Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall, with Vornado and Related Companies ("Related") each guaranteeing the joint venture’s obligations.  Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill all of the joint venture’s obligations.  The obligations of Skanska Moynihan Train Hall Builders have been bonded by Skanska USA and bears a full guaranty from Skanska AB.March 31, 2023.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan including, in particular, the Penn Plaza District.

PENN District and 350 Park Avenue.
There can be no assurance that any of our development or redevelopmentthe above projects will commence, or if commenced, be completed, or completed on schedule or within budget.

Below is a summary of development and redevelopment expenditures incurred for the nine months ended September 30, 2017.  These expenditures include interest of $34,979,000, payroll of $4,334,000 and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $20,906,000, which were capitalized in connection with the development and redevelopment of these projects.
54
(Amounts in thousands)Total New York theMART 
555 California
Street
 Other 
220 Central Park South$196,063
 $—
 $—
 $—
 $196,063
 
606 Broadway11,796
 11,796
 —
 —
 —
 
315/345 Montgomery Street9,603
 —
 —
 9,603
 —
 
90 Park Avenue6,831
 6,831
 —
 —
 —
 
Penn Plaza6,303
 6,303
 —
 —
 —
 
theMART6,163
 —
 6,163
 —
 —
 
304 Canal Street3,627
 3,627
 —
 —
 —
 
Other34,330
 5,709
 509
 —
 28,112
(1) 
 $274,716
 $34,266
 $6,672
 $9,603
 $224,175
 
____________________
(1)Effective July 17, 2017, the date of the spin-off of our Washington, DC segment, capital expenditures and leasing commissions by our former Washington, DC segment have been reclassified to the Other segment. We have reclassified the prior period capital expenditures and leasing commissions to conform to the current period presentation.



87



Liquidity and Capital Resources - continued

Insurance
Cash FlowsFor our properties, we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $250,000,000 includes communicable disease coverage, and we maintain all risk property and rental value insurance with limits of $2.0 billion per occurrence, with sub-limits for certain perils such as flood and earthquake, excluding communicable disease coverage. Our California properties have earthquake insurance with coverage of $350,000,000 per occurrence and in the aggregate, subject to a deductible in the amount of 5% of the value of the affected property. We maintain coverage for certified terrorism acts with limits of $6.0 billion per occurrence and in the aggregate (as listed below), $1.2 billion for non-certified acts of terrorism, and $5.0 billion per occurrence and in the aggregate for terrorism involving nuclear, biological, chemical and radiological (“NBCR”) terrorism events, as defined by the Terrorism Risk Insurance Act of 2002, as amended to date and which has been extended through December 2027.
Penn Plaza Insurance Company, LLC (“PPIC”), our wholly owned consolidated subsidiary, acts as a re-insurer with respect to a portion of all risk property and rental value insurance and a portion of our earthquake insurance coverage, and as a direct insurer for coverage for acts of terrorism including NBCR acts. Coverage for acts of terrorism (excluding NBCR acts) is fully reinsured by third-party insurance companies and the Federal government with no exposure to PPIC. For NBCR acts, PPIC is responsible for a deductible of $1,774,525 and 20% of the balance of a covered loss and the Federal government is responsible for the Nine Months Ended September 30, 2016remaining portion of a covered loss. We are ultimately responsible for any loss incurred by PPIC.

Certain condominiums in which we own an interest (including the Farley Condominiums) maintain insurance policies with different per occurrence and aggregate limits than our policies described above.
We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism and other events. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future. We are responsible for uninsured losses and for deductibles and losses in excess of our insurance coverage, which could be material.
Our cashdebt instruments, consisting of mortgage loans secured by our properties, senior unsecured notes and cash equivalents and restricted cash were $1,464,647,000 at September 30, 2016, a $478,868,000 decrease from the balance at December 31, 2015.  The decrease is duerevolving credit agreements contain customary covenants requiring us to cash flows used in investing and financing activities, partially offset by cash flows provided by operating activities, as discussed below.

Net Cash Provided by Operating Activities

Net cash provided by operating activities of $572,414,000 was comprised of (i) net income of $277,378,000, (ii) $298,361,000 of non-cash adjustments, which include depreciation and amortization expense, real estate impairment losses, net gains on the disposition of wholly owned and partially owned assets, the effect of straight-lining of rents, amortization of below-market leases, net, net realized and unrealized gains on real estate fund investments, net gains on sale of real estate and other, and equity in net income of partially owned entities, (iii) return of capital from real estate fund investments of $71,888,000, (iv) distributions of income from partially owned entities of $56,853,000, partially offset by (v) the net change in operating assets and liabilities of $132,066,000.

Net Cash Used in Investing Activities

Net cash used in investing activities of $686,046,000 was primarily comprised of (i) $426,641,000 of development costs and construction in progress, (ii) $261,971,000 of additions to real estate, (iii) $112,797,000 of investments in partially owned entities, (iv) $91,100,000 of acquisitions of real estate and other, (v) $48,000,000 due to the net deconsolidation of 7 West 34th Street, (vi) $11,700,000 of investments in loans receivable and other and (vii) $4,379,000 in purchases of marketable securities, partially offset by (viii) $167,673,000 of proceeds from sales of real estate and related investments and (ix) $102,836,000 of capital distributions from partially owned entities.

Net Cash Used in Financing Activities

Net cash used in financing activities of Vornado Realty Trust of $365,236,000 was comprised of (i) $1,591,554,000maintain insurance. Although we believe that we have adequate insurance coverage for the repayments of borrowings, (ii) $356,863,000 of dividends paid on common shares, (iii) $246,250,000 for the redemption of preferred shares, (iv) $95,055,000 of distributions to noncontrolling interests, (v) $64,006,000 of dividends paid on preferred shares, (vi) $30,846,000 of debt issuance and other costs, and (vii) $186,000 for the repurchase of shares related to stock compensation agreements and related tax withholdings and other, partially offset by (viii) $2,000,604,000 of proceeds from borrowings, (ix) $11,900,000 of contributions from noncontrolling interests and (x) $7,020,000 of proceeds received from exercise of employee share options.

Net cash used in financing activities of the Operating Partnership of $365,236,000 was comprised of (i) $1,591,554,000 for the repayments of borrowings, (ii) $356,863,000 of distributions to Vornado, (iii) $246,250,000 for the redemption of preferred units, (iv) $95,055,000 of distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries, (v) $64,006,000 of distributions to preferred unitholders, (vi) $30,846,000 of debt issuance and other costs, and (vii) $186,000 for the repurchase of Class A units related to stock compensation agreements and related tax withholdings and other, partially offset by (viii) $2,000,604,000 of proceeds from borrowings, (ix) $11,900,000 of contributions from noncontrolling interests in consolidated subsidiaries and (x) $7,020,000 of proceeds received from exercise of Vornado stock options.



88


Liquidity and Capital Resources - continued

Capital Expenditures for the Nine Months Ended September 30, 2016

Below is a summary of capital expenditures, leasing commissions and a reconciliation of total expenditures on an accrual basis to the cash expended for the nine months ended September 30, 2016.
(Amounts in thousands)Total New York theMART 
555 California
Street
 Other 
Expenditures to maintain assets$68,381
 $39,001
 $10,092
 $5,208
 $14,080
 
Tenant improvements62,556
 48,175
 2,542
 3,201
 8,638
 
Leasing commissions30,462
 26,214
 354
 951
 2,943
 
Non-recurring capital expenditures27,503
 20,224
 182
 874
 6,223
 
Total capital expenditures and leasing commissions (accrual basis)188,902
 133,614
 13,170
 10,234
 31,884
 
Adjustments to reconcile to cash basis:          
Expenditures in the current period applicable to
         prior periods
199,260
 100,542
 25,335
 9,209
 64,174
 
Expenditures to be made in future periods for the
         current period
(80,348) (63,919) 2,139
 (5,018) (13,550) 
Total capital expenditures and leasing commissions (cash basis)$307,814
 $170,237
 $40,644
 $14,425
 $82,508
(1) 
Tenant improvements and leasing commissions:          
Per square foot per annum$6.88
 $7.02
 $4.04
 $7.49
 n/a
 
Percentage of initial rent9.0% 8.9% 7.9% 9.5% n/a
 
____________________
(1)Effective July 17, 2017, the date of the spin-off of our Washington, DC segment, capital expenditures and leasing commissions by our former Washington, DC segment have been reclassified to the Other segment. We have reclassified the prior period capital expenditures and leasing commissions to conform to the current prior period presentation.


Development and Redevelopment Expenditures for the Nine Months Ended September 30, 2016

Below is a summary of development and redevelopment expenditures incurred for the nine months ended September 30, 2016.  These expenditures include interest of $24,822,000, payroll of $9,475,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $45,316,000, which were capitalized in connection with the development and redevelopmentpurposes of these projects.agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain it could adversely affect our ability to finance or refinance our properties and expand our portfolio.
(Amounts in thousands)Total New York theMART 
555 California
Street
 Other 
220 Central Park South$213,170
 $—
 $—
 $—
 $213,170
 
90 Park Avenue28,288
 28,288
 —
 —
 —
 
640 Fifth Avenue23,415
 23,415
 —
 —
 —
 
theMart21,613
 —
 21,613
 —
 —
 
Penn Plaza10,195
 10,195
 —
 —
 —
 
Wayne Towne Center7,910
 —
 —
 —
 7,910
 
330 West 34th Street3,968
 3,968
 —
 —
 —
 
Other118,082
 8,165
 769
 879
 108,269
(1) 
 $426,641
 $74,031
 $22,382
 $879
 $329,349
 
____________________
(1)Effective July 17, 2017, the date of the spin-off our Washington, DC segment, capital expenditures and leasing commissions by our former Washington, DC segment have been reclassified to the Other segment. We have reclassified the prior period capital expenditures and leasing commissions to conform to the current prior period presentation.




89


Liquidity and Capital Resources - continued

Other Commitments and Contingencies

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

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

In January 2022, we exercised a 25-year renewal option on our PENN 1 ground lease extending the term through June 2073. As a result of the exercise, we remeasured the related ground lease liability to include the 25-year extension option and recorded an estimated incremental right-of-use asset and lease liability of approximately $350,000,000 within "right-of-use assets" and "lease liabilities", respectively, on our consolidated balance sheets. The ground lease is subject to fair market value resets every 25 years over the lease term, with the next reset occurring in June 2023.
Generally,In July 2018, we leased 78,000 square feet at 345 Montgomery Street in San Francisco, CA, to a subsidiary of Regus PLC, for an initial term of 15 years. The obligations under the lease were guaranteed by Regus PLC in an amount of up to $90,000,000. The tenant purported to terminate the lease prior to space delivery. We commenced a suit on October 23, 2019 seeking to enforce the lease and the guaranty. On May 11, 2021, the court issued a final statement of decision in our favor and on January 31, 2023, the Court of Appeal affirmed the lower court's decision. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. In April 2023, we entered into a settlement with affiliates of the successor to Regus PLC, pursuant to which we agreed to discontinue all legal proceedings against the Regus PLC successor and its affiliates in exchange for a payment to us of $21,350,000, which will be recognized in our consolidated statements of income in the second quarter of 2023.
Our mortgage loans are non-recourse to us. However, inus, except for the mortgage loans secured by 640 Fifth Avenue, 7 West 34th Street and 435 Seventh Avenue, which we guaranteed and therefore are part of our tax basis. In certain cases, we have provided guarantees or master leased tenant space. These guarantees and master leases terminate either upon the satisfaction of specified circumstances or repayment of the underlying loans. As of September 30, 2017,March 31, 2023, the aggregate dollar amount of these guarantees and master leases is approximately $676,000,000.$1,026,000,000. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to Empire State Development (“ESD”), an entity of New York State, for the Farley Building. The aggregate dollar amount of the guarantee is $510,000,000 but the guarantee will be terminated if we surrender possession of the property to ESD or if we no longer hold a direct or indirect interest in the property.

55

Liquidity and Capital Resources - continued
Other Commitments and Contingencies - continued
As of September 30, 2017, $10,501,000March 31, 2023, $15,273,000 of letters of credit were outstanding under one of our unsecured revolving credit facilities. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest rate coverage and maximum debt to market capitalization ratios, and provide for higher interest rates in the event of a decline in our ratings below Baa3/BBB.BBB- (our current ratings). Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and also contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal.

In September 2016, our 50.1%Our 95% consolidated joint venture (5% is owned by Related Companies ("Related")) developed and owns The Farley Building. In connection with Related was designated by ESD, an entitythe development of New York State to redevelopthe property, the joint venture admitted a historic tax credit investor partner (the "Tax Credit Investor"). Under the terms of the historic Farley Post Office Building. The joint venture entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD,tax credit arrangement, the joint venture is obligatedrequired to buildcomply with various laws, regulations, and contractual provisions. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, may require a refund or reduction of the Moynihan Train Hall, withTax Credit Investor’s capital contributions. As of March 31, 2023, the Tax Credit Investor has made$92,400,000 in capital contributions. Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders is obligated to fulfill allhave guaranteed certain of the joint venture’s obligations.obligations to the Tax Credit Investor.
As investment manager of the Fund we are entitled to an incentive allocation after the limited partners have received a preferred return on their invested capital. The obligationsincentive allocation is subject to catch-up and clawback provisions.Accordingly, based on the March 31, 2023 fair value of Skanska Moynihan Train Hall Buildersthe Fund assets, at liquidation we would be required to make a$26,200,000 payment to the limited partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have been bonded by Skanska USA and bears a full guaranty from Skanska AB.

no income statement impact as it was previously accrued.
As of September 30, 2017,March 31, 2023, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $45,000,000.$10,300,000.

As of September 30, 2017,March 31, 2023, we have construction commitments aggregating approximately $489,000,000.



$351,000,000.

56
90



Funds From Operations (“FFO”)

Vornado Realty Trust

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciatedcertain real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are non-GAAP financial measures used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. The Company also uses FFO attributable to common shareholders plus assumed conversions, as adjusted for certain items that impact the comparability of period-to-period FFO, as one of several criteria to determine performance-based compensation for senior management. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flow as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies. The calculations of both the numerator and denominator used in the computation of income per share are disclosed in Note 1817 – (Loss) Income Per Share/(Loss) Income Per Class A Unit, in our consolidated financial statements on page 3935 of this Quarterly Report on Form 10-Q.

FFO for the Three and Nine Months Ended September 30, 2017 and 2016

FFO attributable to common shareholders plus assumed conversions was $100,178,000, or $0.52 per diluted share for the three months ended September 30, 2017, compared to $225,529,000, or $1.19 per diluted share, for the prior year’s three months.  FFO attributable to common shareholders plus assumed conversions was $564,431,000, or $2.95 per diluted share for the nine months ended September 30, 2017, compared to $658,880,000, or $3.47 per diluted share, for the prior year’s nine months. Details of certain adjustments to FFO are discussed in the financial results summary of our “Overview”.
Below is a reconciliation of net incomeattributable to common shareholders to FFO attributable to common shareholders plus assumed conversions for the three months ended March 31, 2023 and 2022.
(Amounts in thousands, except per share amounts)For the Three Months Ended March 31,
20232022
Reconciliation of net income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:
Net income attributable to common shareholders$5,168 $26,478 
Per diluted share$0.03 $0.14 
FFO adjustments:
Depreciation and amortization of real property$94,792 $105,962 
Net gain on sale of real estate— (551)
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
Depreciation and amortization of real property27,469 32,139 
122,261 137,550 
Noncontrolling interests' share of above adjustments(8,746)(9,506)
FFO adjustments, net$113,515 $128,044 
FFO attributable to common shareholders$118,683 $154,522 
Impact of assumed conversion of dilutive convertible securities400 386 
FFO attributable to common shareholders plus assumed conversions$119,083 $154,908 
Per diluted share$0.61 $0.80 
Reconciliation of weighted average shares outstanding:
Weighted average common shares outstanding191,869 191,724 
Effect of dilutive securities:
Convertible securities2,470 1,136 
Share-based payment awards70 314 
Denominator for FFO per diluted share194,409 193,174 
57
(Amounts in thousands, except per share amounts)For the Three Months Ended
September 30,		 For the Nine Months Ended
September 30,
 2017 2016 2017 2016
Reconciliation of our net (loss) income to FFO:       
Net (loss) income attributable to common shareholders$(29,026) $66,125
 $134,698
 $172,425
Per diluted share$(0.15) $0.35
 $0.71
 $0.91
        
FFO adjustments:       
Depreciation and amortization of real property$102,953
 $130,892
 $361,949
 $398,231
Net gains on sale of real estate(1,530) —
 (3,797) (161,721)
Real estate impairment losses—
 —
 —
 160,700
Proportionate share of adjustments to equity in net (loss) income of partially owned entities to arrive at FFO:       
Depreciation and amortization of real property31,997
 40,281
 108,753
 117,635
Net gains on sale of real estate8
 (2,522) (17,184) (2,841)
Real estate impairment losses4,329
 1,134
 7,547
 5,536
 137,757
 169,785
 457,268
 517,540
Noncontrolling interests' share of above adjustments(8,572) (10,403) (28,444) (31,872)
FFO adjustments, net$129,185
 $159,382
 $428,824
 $485,668
        
FFO attributable to common shareholders$100,159
 $225,507
 $563,522
 $658,093
Convertible preferred share dividends19
 22
 59
 65
Earnings allocated to Out-Performance Plan units—
 —
 850
 722
FFO attributable to common shareholders plus assumed conversions$100,178
 $225,529
 $564,431
 $658,880
Per diluted share$0.52
 $1.19
 $2.95
 $3.47
        
Reconciliation of Weighted Average Shares       
Weighted average common shares outstanding189,593
 188,901
 189,401
 188,778
Effect of dilutive securities:       
Employee stock options and restricted share awards1,254
 1,147
 1,553
 1,067
Convertible preferred shares46
 42
 47
 42
Out-Performance Plan units—
 —
 303
 242
Denominator for FFO per diluted share190,893
 190,090
 191,304
 190,129


91


Item 3. Quantitative and Qualitative Disclosures About Market Risk
We have exposure to fluctuations in market interest rates. Market interest rates are sensitive to many factors that are beyond our control. Our exposure to a change in interest rates on our consolidated and non-consolidated debt (all of which arises out of non-trading activity) is as follows:

(Amounts in thousands, except per share and per unit amounts)2023
March 31, Balance
Weighted
Average
Interest Rate(1)
Effect of 1%
Change in
Base Rates
Consolidated debt:
Fixed rate(2)
$6,144,550 3.59%$— 
Variable rate(3)
2,197,665 5.57%21,977 
$8,342,215 4.11%$21,977 
Pro rata share of debt of non-consolidated entities:
Fixed rate(2)
$1,447,457 3.72%$— 
Variable rate(4)
1,247,201 6.33%12,472 
$2,694,658 4.93%$12,472 
Noncontrolling interests' share of consolidated subsidiaries(6,821)
Total change in annual net income attributable to the Operating Partnership27,628 
Noncontrolling interests’ share of the Operating Partnership(1,986)
Total change in annual net income attributable to Vornado$25,642 
Total change in annual net income attributable to the Operating Partnership per diluted Class A unit$0.13 
Total change in annual net income attributable to Vornado per diluted share$0.13 
______________________
(Amounts in thousands, except per share and per unit amounts)2017 2016
 
September 30,
Balance
 
Weighted
Average
Interest Rate
 
Effect of 1%
Change In
Base Rates
 
December 31,
Balance
 
Weighted
Average
Interest Rate
Consolidated debt:         
Variable rate$3,112,877
 3.03% $31,129
 $3,217,763
 2.45%
Fixed rate6,316,886
 3.65% —
 6,329,547
 3.65%
 $9,429,763
 3.45% 31,129
 $9,547,310
 3.25%
Pro rata share of debt of non-consolidated entities (non-recourse):         
Variable rate – excluding Toys "R" Us, Inc.$1,378,765
 3.02% 13,788
 $1,092,326
 2.50%
Variable rate – Toys "R" Us, Inc.1,248,970
 6.91% 12,490
 1,162,072
 6.05%
Fixed rate - excluding Toys "R" Us, Inc.2,088,979
 5.03% —
 1,969,918
 5.15%
Fixed rate - Toys "R" Us, Inc.466,313
 10.45% —
 671,181
 9.42%
 $5,183,027
 5.44% 26,278
 $4,895,497
 5.36%
Noncontrolling interests' share of consolidated subsidiaries    (1,438)    
Total change in annual net income attributable to the Operating Partnership    55,969
    
Noncontrolling interests’ share of the Operating Partnership    (3,481)    
Total change in annual net income attributable to Vornado    $52,488
    
Total change in annual net income attributable to the Operating Partnership per diluted Class A unit    $0.28
    
Total change in annual net income attributable to Vornado per diluted share    $0.27
    

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of(1)Represents the interest rate environment andin effect as of period end based on the costs and risksappropriate reference rate as of such strategies. As of September 30, 2017, we have anthe contractual reset date plus contractual spread, adjusted for hedging instruments, as applicable.
(2)Includes variable rate debt subject to interest rate swap on a $408,000,000 mortgage loan on Two Penn Plaza that swapped the rate from LIBOR plus 1.65% (2.89%arrangements as of September 30, 2017)period end.
(3)Includes variable rate debt subject to interest rate cap arrangements with a fixedtotal notional amount of $2,009,119, of which $682,060 is attributable to noncontrolling interests. The interest rate cap arrangements have a weighted average strike rate of 4.78% through March 2018, an3.98% and a weighted average remaining term of 11 months.
(4)Includes variable rate debt subject to interest rate swap oncap arrangements with a $375,000,000 mortgage loan on 888 Seventh Avenue that swapped thetotal notional amount of $850,710 at our pro rata share. The interest rate from LIBOR plus 1.60% (2.84% as of September 30, 2017) tocap arrangements have a fixedweighted average strike rate of 3.15% through December 20204.11% and an interest rate swap on a $700,000,000 mortgage loan on 770 Broadway that swapped the rate from LIBOR plus 1.75% (2.98% asweighted average remaining term of September 30, 2017) to a fixed rate of 2.56% through September 2020.seven months.


Fair Value of Debt

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of September 30, 2017,March 31, 2023, the estimated fair value of our consolidated debt was $9,483,000,000.


$7,924,000,000.

58
92


Item 3. Quantitative and Qualitative Disclosures About Market Risk - continued
Derivatives and Hedging
    We utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. The following table summarizes our consolidated hedging instruments, all of which hedge variable rate debt, as of March 31, 2023 and December 31, 2022.
(Amounts in thousands)As of March 31, 2023As of December 31,
2022
Notional AmountAll-In Swapped RateSwap Expiration DateFair Value AssetFair Value LiabilityFair Value Asset
Interest rate swaps:
555 California Street mortgage loan:
In-place swap$840,000 (1)2.26%05/24$39,859 $— $49,888 
Forward swap (effective 05/24)840,000 (1)5.92%05/26— 14,239 — 
770 Broadway mortgage loan700,000 4.98%07/2718,448 — 29,226 
PENN 11 mortgage loan500,000 2.22%03/2420,640 — 26,587 
Unsecured revolving credit facility575,000 3.88%08/2715,354 — 24,457 
Unsecured term loan(2)
800,000 4.05%(2)12,408 770 21,024 
100 West 33rd Street mortgage loan480,000 5.06%06/27283 — 6,886 
888 Seventh Avenue mortgage loan200,000 (3)4.76%09/273,458 — 6,544 
4 Union Square South mortgage loan99,550 (4)3.74%01/253,153 — 4,050 
Interest rate caps:
1290 Avenue of the Americas mortgage loan950,000 (5)11/235,765 — 7,590 
One Park Avenue mortgage loan(6)
525,000 (6)03/257,718 — 5,472 
Various mortgage loans2,122 — 2,080 
$129,208 $15,009 $183,804 
____________________
(1)Represents our 70.0% share of the $1.2 billion mortgage loan. In March 2023, we entered into the forward swap arrangement detailed above.
(2)Represents the aggregate fair value of various interest rate swap arrangements to hedge interest payments on our unsecured term loan. In February 2023, we entered into a forward interest rate swap arrangement for $150,000 of the $800,000 unsecured term loan. The unsecured term loan, which matures in December 2027, is subject to various interest rate swap arrangements through August 2027, which are detailed below:
Swapped BalanceAll-In Swapped RateUnswapped Balance
(bears interest at S+130)
Through 10/23$800,000 4.05%$— 
10/23 through 07/25700,000 4.53%100,000 
07/25 through 10/26550,000 4.36%250,000 
10/26 through 08/2750,000 4.04%750,000 

(3)The remaining $72,400 amortizing mortgage loan balance bears interest at a floating rate of SOFR plus 1.80% (6.47% as of March 31, 2023).
(4)The remaining $20,450 mortgage loan balance bears interest at a floating rate of SOFR plus 1.50% (6.17% as of March 31, 2023).
(5)LIBOR cap strike rate of 4.00%.
(6)SOFR strike rate of 3.89%. In March 2023, we entered into a forward cap arrangement which expires in March 2025 and is effective upon the March 2024 expiration of the currently in-place cap. The forward cap has a SOFR strike rate of 3.89%.
59

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures (Vornado Realty Trust)

Disclosure Controls and Procedures: Our management, with the participation of Vornado’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2017,March 31, 2023, such disclosure controls and procedures were effective.

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

Evaluation of Disclosure Controls and Procedures (Vornado Realty L.P.)

Disclosure Controls and Procedures: Vornado Realty L.P.’s management, with the participation of Vornado’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a‑15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, Vornado’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2017,March 31, 2023, such disclosure controls and procedures were effective.

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



93

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There were no material changes to the Risk Factors disclosed in our Annual Report on Form 10-K as amended, for the year ended December 31, 2016.2022.

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

Vornado Realty Trust

None.

Vornado Realty L.P.

During the quarter ended September 30, 2017,March 31, 2023, we issued 492,312 463,314Class A units in connection with equity(i) the issuance of Vornado common shares and (ii) the exercise of awards issued pursuant to Vornado’s omnibus share plan, including with respect to grants of restricted Vornado common shares and restricted units of the Operating Partnership and upon conversion, surrender or exchange of the Operating Partnership’s units or Vornado stock options, andoptions. The consideration received included $17,195,623 $146,382in cash proceeds. Such units were issued in reliance on an exemption from registration under Section 4(2)4(a)(2) of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
None.

Item 6. Exhibits
Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.

60


94


EXHIBIT INDEX
Exhibit No.
15.1

——
Letter regarding Unaudited Interim Financial Information of Vornado Realty Trust
15.2

——
Letter regarding Unaudited Interim Financial Information of Vornado Realty L.P.
31.1

——
Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty Trust
31.2

——
Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty Trust
31.3

——
Rule 13a-14 (a) Certification of the Chief Executive Officer of Vornado Realty L.P.
31.4

——
Rule 13a-14 (a) Certification of the Chief Financial Officer of Vornado Realty L.P.
32.1

——
Section 1350 Certification of the Chief Executive Officer of Vornado Realty Trust
32.2

——
Section 1350 Certification of the Chief Financial Officer of Vornado Realty Trust
32.3

——
Section 1350 Certification of the Chief Executive Officer of Vornado Realty L.P.
32.4

——
Section 1350 Certification of the Chief Financial Officer of Vornado Realty L.P.
101.INS101
——XBRL Instance Document ofThe following financial information from Vornado Realty Trust and Vornado Realty L.P. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) consolidated balance sheets, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of changes in equity, (v) consolidated statements of cash flows, and (vi) the notes to consolidated financial statements.
101.SCH104
——XBRL Taxonomy Extension Schema ofThe cover page from the Vornado Realty Trust and Vornado Realty L.P. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted as iXBRL and contained in Exhibit 101.
101.CAL
—XBRL Taxonomy Extension Calculation Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.DEF
—XBRL Taxonomy Extension Definition Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.LAB
—XBRL Taxonomy Extension Label Linkbase of Vornado Realty Trust and Vornado Realty L.P.
101.PRE
—XBRL Taxonomy Extension Presentation Linkbase of Vornado Realty Trust and Vornado Realty L.P.

61


95


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VORNADO REALTY TRUST
(Registrant)
Date: May 1, 2023By:VORNADO REALTY TRUST/s/ Deirdre Maddock
(Registrant)
Date: October 30, 2017By:/s/ Matthew Iocco
Matthew Iocco,Deirdre Maddock, Chief Accounting Officer (duly
(duly authorized officer and principal accounting officer)


62
96


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VORNADO REALTY L.P.
(Registrant)
Date: May 1, 2023By:VORNADO REALTY L.P./s/ Deirdre Maddock
(Registrant)
Date: October 30, 2017By:/s/ Matthew Iocco
Matthew Iocco,Deirdre Maddock, Chief Accounting Officer of Vornado
Realty Trust, sole General Partner of Vornado Realty
L.P. (duly authorized officer and principal accounting
officer)



9763