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VNO Vornado Realty Trust

Filed: 16 Feb 21, 4:17pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended:December 31, 2020
 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to 
Commission File Number:001-11954(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 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)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Registrant Title of Each Class Trading Symbol(s)Name of Exchange on Which Registered
Vornado Realty Trust Common Shares of beneficial interest, $.04 par value per share VNONew York Stock Exchange
  Cumulative Redeemable Preferred Shares of beneficial
interest, liquidation preference $25.00 per share:
  
Vornado Realty Trust 5.70% Series K VNO/PKNew York Stock Exchange
Vornado Realty Trust 5.40% Series L VNO/PLNew York Stock Exchange
Vornado Realty Trust5.25% Series MVNO/PMNew York Stock Exchange
Vornado Realty Trust5.25% Series NVNO/PNNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Each Class
Vornado Realty TrustSeries A Convertible Preferred Shares of beneficial interest, liquidation preference $50.00 per share
Vornado Realty L.P. Class A Units of Limited Partnership Interest



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Vornado Realty Trust: Yes       No    Vornado Realty L.P.: Yes       No 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
Vornado Realty Trust: Yes       No     Vornado Realty L.P.: Yes       No 
 
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer," “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
    Vornado Realty Trust:
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
    Vornado Realty L.P.:
Large Accelerated FilerAccelerated Filer
Non-Accelerated FilerSmaller 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Vornado Realty Trust: Yes       No     Vornado Realty L.P.: Yes       No   
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 

The aggregate market value of the voting and non-voting common shares held by non-affiliates of Vornado Realty Trust, i.e. by persons other than officers and trustees of Vornado Realty Trust, was $6,727,146,000 at June 30, 2020.

As of December 31, 2020, there were 191,354,679 common shares of beneficial interest outstanding of Vornado Realty Trust.

There is no public market for the Class A units of limited partnership interest of Vornado Realty L.P. Based on the June 30, 2020 closing share price of Vornado Realty Trust’s common shares, which are issuable upon redemption of the Class A units, the aggregate market value of the Class A units held by non-affiliates of Vornado Realty L.P., i.e. by persons other than Vornado Realty Trust and its officers and trustees, was $396,866,000 at June 30, 2020.

Documents Incorporated by Reference

Part III: Portions of Proxy Statement for Annual Meeting of Vornado Realty Trust’s Shareholders to be held on May 20, 2021.



EXPLANATORY NOTE
 
This report combines the Annual Reports on Form 10-K for the fiscal year ended December 31, 2020 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” 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 92.8% 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 Annual Reports on Form 10-K 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 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, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.



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 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities;
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable; and
Item 8. Financial Statements and Supplementary Data which includes the following specific disclosures for Vornado Realty Trust and Vornado Realty L.P.:
Note 11. Redeemable Noncontrolling Interests
Note 12. Shareholders' Equity/Partners' Capital
Note 15. Stock-based Compensation
Note 19. (Loss) Income Per Share/(Loss) Income Per Class A Unit
This report also includes separate Part II, Item 9A. Controls and Procedures 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.



INDEX
____________________
(1) These items are omitted in whole or in part because Vornado, the Operating Partnership’s sole general partner, will file a definitive Proxy Statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 with the Securities and Exchange Commission no later than 120 days after December 31, 2020, portions of which are incorporated by reference herein.

5


FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward‑looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Annual Report on Form 10‑K. We also note the following forward-looking statements: in the case of our development and redevelopment projects, the estimated completion date, estimated project cost and cost to complete; and estimates of future capital expenditures, dividends to common and preferred shareholders and operating partnership distributions. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
Currently, one of the most significant factors is the ongoing adverse effect of the COVID-19 pandemic on our business, financial condition, results of operations, cash flows, operating performance and the effect it has had and may continue to have on our tenants, the global, national, regional and local economies and financial markets and the real estate market in general. The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration of the pandemic, which are highly uncertain at this time but that impact could be material. Moreover, you are cautioned that the COVID-19 pandemic will heighten many of the risks identified in “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
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 Annual Report on Form 10-K 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 Annual Report on Form 10-K.

6


PART I


ITEM 1.     BUSINESS
Vornado is a fully‑integrated REIT and conducts its business through, and substantially all of its interests in properties are held by, the Operating Partnership, a Delaware limited partnership. Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders are dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors. Vornado is the sole general partner of, and owned approximately 92.8% of the common limited partnership interest in the Operating Partnership as of December 31, 2020.
We currently own all or portions of: 
New York:
20.6 million square feet of Manhattan office space in 33 properties;
2.7 million square feet of Manhattan street retail space in 65 properties;
1,989 units in 10 Manhattan residential properties;
The 1,700 room Hotel Pennsylvania located on Seventh Avenue at 33rd Street in the heart of the Penn District (closed since April 1, 2020 as a result of the COVID-19 pandemic);
A 32.4% interest in Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX), which owns seven properties in the greater New York metropolitan area, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg, L.P. headquarters building;
Signage throughout the Penn District and Times Square; and
Building Maintenance Services LLC ("BMS"), a wholly owned subsidiary, which provides cleaning and security services for our buildings and third parties.
Other Real Estate and Investments:
The 3.7 million square foot theMART in Chicago;
A 70% controlling interest in 555 California Street, a three-building office complex in San Francisco’s financial district aggregating 1.8 million square feet;
A 25.0% interest in Vornado Capital Partners, our real estate fund. We are the general partner and investment manager of the fund. The fund is in wind-down; and
Other real estate and investments.
OBJECTIVES AND STRATEGY
Our business objective is to maximize Vornado shareholder value. We intend to achieve this objective by continuing to pursue our investment philosophy and to execute 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;
developing and redeveloping properties to increase returns and maximize value; and
investing in operating companies that have a significant real estate component.
We expect to finance our growth, acquisitions and investments using internally generated funds and 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.
DISPOSITIONS
We completed the following sale transactions during 2020:
$1.05 billion net proceeds from the sale of 35 condominium units at 220 Central Park South ("220 CPS"); and
$28 million net proceeds from the sale of all of our 6,250,000 common shares of Pennsylvania Real Estate Investment Trust.
FINANCINGS
We completed the following financing transactions during 2020:
$800 million unsecured term loan balance increased from $750 million;
$700 million mortgage loan on 770 Broadway extended to March 2022;
$500 million refinancing of PENN11;
$350 million mortgage loan paid down by $50 million and extended to August 2025 on the retail condominium of 731 Lexington Avenue (32.4% interest);
$300 million issuance of 5.25% Series N cumulative redeemable preferred shares;
$94 million financing of The Alexander, a 312-unit residential building (32.4% interest); and
$52.5 million mortgage loan repayment on our land under a portion of the Borgata Hotel and Casino complex.
7


DEVELOPMENT AND REDEVELOPMENT EXPENDITURES
220 Central Park South
We are completing construction of a residential condominium tower containing 397,000 salable square feet at 220 CPS. The development cost of this project (exclusive of land cost) is estimated to be approximately $1.480 billion, of which $1.455 billion has been expended as of December 31, 2020.
Penn District
Farley
Our 95% joint venture (5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail, which will include approximately 844,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 114,000 square feet of restaurant and retail space. The total development cost of this project is estimated to be approximately $1,120,000,000, an increase of $90,000,000, which is primarily due to higher projected tenant improvement allowances for the office, restaurant and retail space. As of December 31, 2020, $791,994,000 has been expended, which has been reduced by $88,000,000 of historic tax credit investor contributions (at our share).
The joint venture entered into a development agreement with Empire State Development (“ESD”), an entity of New York State, to build the adjacent Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture's obligations. The joint venture entered into a design-build contract with Skanska Moynihan Train Hall Builders ("Skanska") pursuant to which they built the Moynihan Train Hall on the joint venture's behalf. Skanska substantially completed construction as of December 31, 2020, thereby fulfilling this obligation to ESD. The joint venture, which we consolidate on our consolidated balance sheets, leased the entire property during the construction period and pursuant to ASC 842-40-55, was required to recognize all development expenditures for Moynihan Train Hall. Accordingly, the development expenditures funded by governmental agencies were presented as “Moynihan Train Hall development expenditures” with a corresponding obligation recorded to “Moynihan Train Hall Obligation” on our consolidated balance sheets. On December 31, 2020, upon substantial completion of Moynihan Train Hall, the portions of the property not pertaining to the joint venture's commercial space were severed from its lease with ESD and we removed the "Moynihan Train Hall development expenditures" and the offsetting “Moynihan Train Hall obligation” from our consolidated balance sheets.
PENN1
We are redeveloping PENN1, a 2,545,000 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"), within the footprint of PENN1. Skanska USA Civil Northeast, Inc. will perform 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. The total development cost of our PENN1 project is estimated to be $450,000,000, an increase of $125,000,000, which is primarily due to the addition of the Concourse retail redevelopment project and sustainability initiatives, including the installation of triple pane high energy performance windows and the implementation of an electrification program to allow PENN1 to access more clean renewable electricity. As of December 31, 2020, $167,894,000 has been expended.
PENN2
We are redeveloping PENN2, a 1,795,000 square foot (as expanded) office building, located on the west side of Seventh Avenue between 31st and 33rd Street. The development cost of this project is estimated to be $750,000,000, of which $91,219,000 has been expended as of December 31, 2020.
We are also making districtwide improvements within the Penn District. The development cost of these improvements is estimated to be $100,000,000, of which $19,618,000 has been expended as of December 31, 2020.
Other
We are redeveloping a 78,000 square foot Class A office building at 345 Montgomery Street, a part of our 555 California Street complex in San Francisco (70.0% interest) located at the corner of California and Pine Street. The development cost of this project is estimated to be approximately $66,000,000, of which our share is $46,000,000. As of December 31, 2020, $55,261,000 has been expended, of which our share is $38,683,000.
We are redeveloping a 165,000 square foot office building at 825 Seventh Avenue, located at the corner of 53rd Street and Seventh Avenue (50.0% interest). The redevelopment cost of this project is estimated to be approximately $30,000,000, of which our share is $15,000,000. As of December 31, 2020, $26,508,000 has been expended, of which our share is $13,254,000.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan including, in particular, the Penn District.
There can be no assurance that the above projects will be completed, completed on schedule or within budget.
8


COMPETITION
We compete with a large number of real estate investors, property owners and developers, some of which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See "Risk Factors" in Item 1A for additional information regarding these factors.
SEGMENT DATA
We operate in the following reportable segments: New York and Other. Financial information related to these reportable segments for the years ended December 31, 2020, 2019 and 2018 is set forth in Note 24 – Segment Information to our consolidated financial statements in this Annual Report on Form 10-K.
SEASONALITY 
Our revenues and expenses are subject to seasonality during the year which impacts quarterly net earnings, cash flows and funds from operations, and therefore impacts comparisons of the current quarter to the previous quarter. The New York segment has historically experienced higher utility costs in the first and third quarters of the year. 
TENANTS ACCOUNTING FOR OVER 10% OF REVENUES 
None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2020, 2019 and 2018.
CERTAIN ACTIVITIES 
We do not base our acquisitions and investments on specific allocations by type of property. We have historically held our properties for long‑term investment; however, it is possible that properties in our portfolio may be sold or otherwise disposed of when circumstances warrant. Further, we have not adopted a policy that limits the amount or percentage of assets which could be invested in a specific property or property type. Generally our activities are reviewed and may be modified from time to time by Vornado’s Board of Trustees without the vote of our shareholders or Operating Partnership unitholders. 
HUMAN CAPITAL RESOURCES
As of December 31, 2020, we have approximately 2,899 employees, consisting of (i) 246 corporate staff; (ii) 2,568 employees of the New York segment comprised of 1,997 employees of Building Maintenance Services LLC, a wholly owned subsidiary, which provides cleaning, security and engineering services primarily to our New York properties, 422 employees at the Hotel Pennsylvania and 149 employees in leasing and property management; and (iii) 85 employees of theMART. The foregoing does not include employees of partially owned entities. 
We continue to pursue our investment philosophy and to execute our operating strategies through maintaining a superior team of operating and investment professionals and an entrepreneurial spirit. We value our employees as our greatest asset, and to foster their talent and growth, we provide training and education, promote career and personal development, and encourage innovation and engagement.
PRINCIPAL EXECUTIVE OFFICES 
Our principal executive offices are located at 888 Seventh Avenue, New York, New York 10019; telephone (212) 894‑7000. 
MATERIALS AVAILABLE ON OUR WEBSITE 
Copies of our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934 are available free of charge through our website (www.vno.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics, and Corporate Governance Guidelines. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website. Copies of these documents are also available directly from us free of charge. Our website also includes other financial and non-financial information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K. Copies of our filings under the Securities Exchange Act of 1934 are also available free of charge from us, upon request.
9


ITEM 1A.     RISK FACTORS 
Material factors that may adversely affect our business, operations and financial condition are summarized below. We refer to the equity and debt securities of both Vornado and the Operating Partnership as our “securities” and the investors who own shares of Vornado or units of the Operating Partnership, or both, as our “equity holders.” The risks and uncertainties described herein may not be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business, operations and financial condition. See “Forward-Looking Statements” contained herein on page 6.
RISKS RELATED TO OUR PROPERTIES AND INDUSTRY
Our business, financial condition, results of operations and cash flows have been and are expected to continue to be adversely affected by the recent COVID-19 pandemic and the impact could be material to us.
Our business has been and is expected to continue to be adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus. In March 2020, our “non-essential” retail tenants were ordered to temporarily close and although substantially all re-opened in the latter part of June 2020, there continue to be limitations on occupancy and other restrictions that affect their ability to resume full operations and impact their financial health. Our office buildings remain open and many of our office tenants are working remotely. Trade shows at theMART were cancelled beginning March 2020 and are expected to resume in 2021. In April 2020, we closed the Hotel Pennsylvania. While we believe our tenants are required to pay rent under their leases and we have commenced legal proceedings against certain tenants that have failed to pay rent under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and abatements for certain of our tenants.
Federal, state and local regulations may also affect our ability to collect rent or enforce remedies for the failure to pay rent. Certain of our tenants have incurred and may continue to incur significant costs or losses as a result of the COVID-19 pandemic and/or incur other liabilities related to shelter-in-place orders, quarantines, infection or other related factors that may adversely impact their ability to pay us timely or at all. Tenants that experience deteriorating financial conditions may be unwilling or unable to pay rent on a timely basis, or at all. Tenants may also reassess their long-term physical space needs as a result of potential trends arising out of the COVID-19 pandemic, including increasing numbers of employees working from home, increased shopping through e-commerce, technological innovations and new norms regarding physical space needs.
The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market or other disruptions worldwide. Conditions in the bank lending, capital and other financial markets may deteriorate as a result of the pandemic, our access to capital and other sources of funding may become constrained and the ratios of our debt to asset values may deteriorate, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. In addition, the deterioration of global, national, regional and local economic conditions as a result of the pandemic may ultimately decrease occupancy levels and/or rent levels across our portfolio as tenants reduce or defer their spending, which may result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders and the impact could be material. In addition, the value of our real estate assets may decline, which may result in non-cash impairment charges in future periods and the impact could be material.
The extent of the COVID-19 pandemic's effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak (and any other strains of the coronavirus) and governmental responses thereto, including the efficacy (including duration) and distribution of vaccines, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to estimate the ultimate effect of these factors on our business but the adverse impact on our business, results of operations, financial condition and cash flows could be material.
A significant portion of our properties is located in the New York City Metropolitan area and is affected by the economic cycles and risks inherent to this area. 
In 2020, approximately 87% of our net operating income ("NOI", a non-GAAP measure) came from properties located in the New York City metropolitan area. We may continue to concentrate a significant portion of our future acquisitions, development and redevelopment in this area. Real estate markets are subject to economic downturns and we cannot predict how economic conditions will impact this market in either the short or long term. Declines in the economy or declines in real estate markets in the New York City metropolitan area, including the effects of the COVID-19 pandemic, have hurt and could continue to hurt our financial performance and the value of our properties. In addition to the factors affecting the national economic condition generally, the factors affecting economic conditions in this region include:
financial performance and productivity of the media, advertising, professional services, financial, technology, retail, insurance and real estate industries;
business layoffs or downsizing;
any oversupply of, or reduced demand for, real estate;
industry slowdowns;
relocations of businesses;
changing demographics;
increased work from home and use of alternative work places;
10


changes in the number of domestic and international tourists to our markets (including as a result of changes in the relative strengths of world currencies and as a result of the COVID-19 pandemic);
the fiscal health of New York State and New York City governments and local transit authorities, particularly as a result of the COVID-19 pandemic;
infrastructure quality; and
changes in rates or the treatment of the deductibility of state and local taxes.
It is impossible for us to ensure the accuracy of predictions of the future or the effect of trends in the economic and investment climates of the geographic areas in which we concentrate, and more generally of the United States, or the real estate markets in these areas. Local, national or global economic downturns could negatively affect the value of our properties, our businesses and profitability.
We are subject to risks that affect the general and New York City retail environments.
Certain of our properties are Manhattan retail properties. In 2020, approximately 15% of our NOI is from Manhattan retail properties. As such, these properties are affected by the general and New York City retail environments, including office and residential occupancy rates, the level of consumer spending and consumer confidence, Manhattan tourism, the threat of terrorism, increasing competition from on-line retailers, other retailers, and outlet malls, and the impact of technological change upon the retail environment generally. These factors could adversely affect the financial condition of our retail tenants, or result in the bankruptcy of such tenants, and the willingness of retailers to lease space in our retail locations, which could have an adverse effect on the value of our properties, our business and profitability.
Our performance and the value of an investment in us are subject to risks associated with our real estate assets and with the real estate industry.
The value of our real estate and the value of an investment in us fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.
The factors that affect the value of our real estate investments include, among other things:
global, national, regional and local economic conditions;
competition from other available space, including co-working space and sub-leases;
local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
how well we manage our properties;
the development and/or redevelopment of our properties;
changes in market rental rates;
the impact on our retail tenants and demand for retail space at our properties due to increased competition from online shopping;
the timing and costs associated with property improvements and rentals;
whether we are able to pass all or portions of any increases in operating costs through to tenants;
changes in real estate taxes and other expenses;
the ability of state and local governments to operate within their budgets;
whether tenants and users such as customers and shoppers consider a property attractive;
changes in consumer preferences adversely affecting retailers and retail store values;
changes in space utilization by our tenants due to technology, economic conditions and business environment;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
consequences of any armed conflict involving, or terrorist attacks against, the United States or individual acts of violence in public spaces;
trends in office real estate;
availability of financing on acceptable terms or at all;
inflation or deflation;
fluctuations in interest rates;
our ability to obtain adequate insurance;
changes in zoning laws and taxation;
government regulation;
potential liability under environmental or other laws or regulations;
natural disasters;
general competitive factors;
climate changes; and
pandemics.
The rents or sales proceeds we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If rental revenues, sales proceeds and/or occupancy levels decline, we generally would expect to have less cash
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available for operating costs, to pay indebtedness and for distribution to equity holders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.
Terrorist attacks may adversely affect the value of our properties and our ability to generate cash flow. 
We have significant investments in the New York City, Chicago and San Francisco metropolitan areas. In response to a terrorist attack or the perceived threat of terrorism, tenants in these areas may choose to relocate their businesses to less populated, lower-profile areas of the United States that may be perceived to be less likely targets of future terrorist activity and fewer customers may choose to patronize businesses in these areas. This, in turn, would trigger a decrease in the demand for space in these areas, which could increase vacancies in our properties and force us to lease space on less favorable terms. Furthermore, we may experience increased costs in security, equipment and personnel. As a result, the value of our properties and the level of our revenues and cash flows could decline materially.
Natural disasters and the effects of climate change could have a concentrated impact on the areas where we operate and could adversely impact our results. 
Our investments are concentrated in the New York, Chicago and San Francisco metropolitan areas. Natural disasters, including earthquakes, storms, tornados, floods and hurricanes, could cause significant damage to our properties and the surrounding environment or area. Potentially adverse consequences of “global warming,” including rising sea levels, could similarly have an impact on our properties and the economies of the metropolitan areas in which we operate. Government efforts to combat climate change may impact the cost of operating our properties. Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy at our properties and requiring us to expend funds as we seek to repair and protect our properties against such risks. The incurrence of these losses, costs or business interruptions may adversely affect our operating and financial results.
U.S. federal tax reform legislation now and in the future could affect REITs generally, the geographic markets in which we operate, the trading of our shares and our results of operations, both positively and negatively, in ways that are difficult to anticipate.
The Tax Cuts and Jobs Act of 2017 (the “2017 Act”) represented sweeping tax reform legislation that made significant changes to corporate and individual tax rates and the calculation of taxes, as well as international tax rules. As a REIT, we are generally not required to pay federal taxes otherwise applicable to regular corporations if we comply with the various tax regulations governing REITs. Shareholders, however, are generally required to pay taxes on REIT dividends. The 2017 Act and future tax reform legislation could impact our share price or how shareholders and potential investors view an investment in REITs. For example, the decrease in corporate tax rates in the 2017 Act could decrease the attractiveness of the REIT structure relative to companies that are not organized as REITs. In addition, while certain elements of the 2017 Act do not impact us directly as a REIT, they could impact the geographic markets in which we operate as well as our tenants in ways, both positive and negative, that are difficult to anticipate. For example, the limitation in the 2017 Act on the deductibility of certain state and local taxes may make operating in jurisdictions that impose such taxes at higher rates less desirable than operating in jurisdictions imposing such taxes at lower rates. The overall impact of the 2017 Act and other legislation also depends on the future interpretations and regulations that may be issued by U.S. tax authorities, which may be affected by changes in governmental administrations, and it is possible that future guidance could adversely impact us.
Real estate is a competitive business and that competition may adversely impact us.
We compete with a large number of real estate investors, property owners and developers, some of which 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. Substantially all of our properties face competition from similar properties in the same market, which may adversely impact the rents we can charge at those properties and our results of operations.
We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants who may not be able to pay.
Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. In addition, because a majority of our income comes from renting of real property, our income, funds available to pay indebtedness and funds available for distribution to equity holders will decrease if a significant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorable terms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and may incur substantial legal and other costs. As a result of the COVID-19 pandemic, Federal, state and local regulations have affected our ability to collect rent or enforce remedies for the failure to pay rent. Even if we are able to enforce our rights, a tenant may not have recoverable assets. Additionally, in limited circumstances, we have agreed and may continue to agree to rent deferrals and abatements for certain of our tenants.
We may be adversely affected by trends in office real estate.
In 2020, approximately 83% of our NOI is from our office properties. Work from home, flexible work schedules, open workplaces, videoconferencing, and teleconferencing are becoming more common, particularly as a result of the COVID-19
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pandemic. These practices may enable businesses to reduce their office space requirements. There is also an increasing trend among some businesses to utilize shared office spaces and co-working spaces. A continuation of the movement towards these practices could, over time, erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations.
We may be unable to renew leases or relet space as leases expire.
When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Even if tenants do renew or we can relet the space, the terms of renewal or reletting, considering among other things, rent and other concessions, the cost of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases. In addition, changes in space utilization by our tenants may impact our ability to renew or relet space without the need to incur substantial costs in renovating or redesigning the internal configuration of the relevant property. If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and distributions to equity holders could be adversely affected.
Bankruptcy or insolvency of tenants may decrease our revenue, net income and available cash.
From time to time, some of our tenants have declared bankruptcy, and other tenants may declare bankruptcy or become insolvent in the future. The bankruptcy or insolvency of a major tenant could cause us to suffer lower revenues and operational difficulties, including leasing the remainder of the property. As a result, the bankruptcy or insolvency of a major tenant could result in decreased net income and funds available to pay our indebtedness or make distributions to equity holders.
RISKS RELATED TO OUR OPERATIONS AND STRATEGIES
We face risks associated with property acquisitions. 
We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including, but not limited to, large portfolios that could increase our size and result in alterations to our capital structure. Our acquisition activities and their success are subject to the following risks:
even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs;
we may be unable to obtain or assume financing for acquisitions on favorable terms or at all;
acquired properties may fail to perform as expected;
the actual costs of repositioning, redeveloping or maintaining acquired properties may be greater than our estimates and may require significantly greater time and attention of management than anticipated;
the acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied;
acquired properties may be located in new markets where we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, costs associated with opening a new regional office and unfamiliarity with local governmental and permitting procedures;
we may acquire real estate through the acquisition of the ownership entity subjecting us to the risks of that entity and we may be exposed to the liabilities of properties or companies acquired, some of which we may not be aware of at the time of acquisition; and
we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and this could have an adverse effect on our results of operations and financial condition.
Any delay or failure on our part to identify, negotiate, finance and consummate such acquisitions in a timely manner and on favorable terms, or operate acquired properties to meet our financial expectations, could impede our growth and have an adverse effect on us, including our financial condition, results of operations, cash flow and the market value of our securities.
We are exposed to risks associated with property redevelopment and repositioning that could adversely affect us, including our financial condition and results of operations.
We continue to engage in redevelopment and repositioning activities with respect to our properties, and, accordingly, we are subject to certain risks, which could adversely affect us, including our financial condition and results of operations. These risks include, without limitation, (i) the availability and pricing of financing on favorable terms or at all; (ii) the availability and timely receipt of zoning and other regulatory approvals; (iii) the potential for the fluctuation of occupancy rates and rents at redeveloped properties, which may result in our investment not being profitable; (iv) start up, repositioning and redevelopment costs may be higher than anticipated; (v) cost overruns and untimely completion of construction (including risks beyond our control, such as weather or labor conditions, or material shortages); (vi) the potential that we may fail to recover expenses already incurred if we abandon development or redevelopment opportunities after we begin to explore them; (vii) the potential that we may expend funds on and devote management time to projects which we do not complete; (viii) the inability to complete leasing of a property on schedule or at all, resulting in an increase in carrying or redevelopment costs; and (ix) the possibility that properties will be leased at below expected rental rates. These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion
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of redevelopment activities or the ultimate rents achieved on new developments, any of which could have an adverse effect on our financial condition, results of operations, cash flow, the market value of our common shares and ability to satisfy our principal and interest obligations and to make distributions to our shareholders.
From time to time we have made, and in the future we may seek to make one or more material acquisitions. The announcement of such a material acquisition may result in a rapid and significant decline in the price of our securities.
From time to time we have made, and in the future we may seek to make one or more material acquisitions that we believe will maximize shareholder value. However, an announcement by us of one or more significant acquisitions could result in a quick and significant decline in the price of our securities.
It may be difficult to sell real estate timely, which may limit our flexibility.
Real estate investments are relatively illiquid. Consequently, we may have limited ability to dispose of assets in our portfolio promptly in response to changes in economic or other conditions which could have an adverse effect on our sources of working capital and our ability to satisfy our debt obligations.
We may not be permitted to dispose of certain properties or pay down the debt associated with those properties when we might otherwise desire to do so without incurring additional costs. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn similar returns.
As part of an acquisition of a property, or a portfolio of properties, we may agree, and in the past have agreed, not to dispose of the acquired properties or reduce the mortgage indebtedness for a long-term period, unless we pay certain of the resulting tax costs of the seller. These agreements could result in us holding on to properties that we would otherwise sell and not pay down or refinance. In addition, when we dispose of or sell assets, we may not be able to reinvest the sales proceeds and earn returns similar to those generated by the assets that were sold.
From time to time we have made, and in the future we may seek to make investments in companies over which we do not have sole control. Some of these companies operate in industries with different risks than investing and operating real estate.
From time to time we have made, and in the future we may seek to make, investments in companies that we may not control, including, but not limited to, Alexander’s, our Fifth Avenue and Times Square JV, and other equity and loan investments. Although these businesses generally have a significant real estate component, some of them operate in businesses that are different from investing and operating real estate. Consequently, we are subject to operating and financial risks of those industries and to the risks associated with lack of control, such as having differing objectives than our partners or the entities in which we invest, or becoming involved in disputes, or competing directly or indirectly with these partners or entities. In addition, we rely on the internal controls and financial reporting controls of these entities and their failure to maintain effectiveness or comply with applicable standards may adversely affect us.
We are subject to risks involved in real estate activity through joint ventures and private equity real estate funds.
We currently own properties through joint ventures and private equity real estate funds with other persons and entities and may in the future acquire or own properties through joint ventures and funds when we believe circumstances warrant the use of such structures. Joint venture and fund investments involve risk, including: the possibility that our partners might refuse to make capital contributions when due and therefore we may be forced to make contributions to maintain the value of the property; that we may be responsible to our partners for indemnifiable losses; that our partners might at any time have business or economic goals that are inconsistent with ours; that third parties may be hesitant or refuse to transact with the joint venture or fund due to the identity of our partners; and that our partners may be in a position to take action or withhold consent contrary to our recommendations, instructions or requests. We and our respective joint venture partners may each have the right to trigger a buy-sell, put right or forced sale arrangement, which could cause us to sell our interest, or acquire our partner’s interest, or to sell the underlying asset, at a time when we otherwise would not have initiated such a transaction, without our consent or on unfavorable terms. In some instances, joint venture and fund partners may have competing interests in our markets that could create conflicts of interest. These conflicts may include compliance with the REIT requirements, and our REIT status could be jeopardized if any of our joint ventures or funds do not operate in compliance with REIT requirements. To the extent our partners do not meet their obligations to us or our joint ventures or funds, or they take action inconsistent with the interests of the joint venture or fund, we may be adversely affected.
RISKS RELATED TO OUR INDEBTEDNESS AND ACCESS TO CAPITAL
Capital markets and economic conditions can materially affect our liquidity, financial condition and results of operations as well as the value of an investment in our debt and equity securities.
There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and the economy. Demand for office and retail space typically declines nationwide due to an economic downturn, bankruptcies, downsizing, layoffs and cost cutting. Government action or inaction may adversely affect the state of the capital markets. The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads, which may adversely affect our liquidity and financial condition, including our results of operations, and the liquidity and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our securities.
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We may not be able to obtain capital to make investments.
We depend primarily on external financing to fund the growth of our business. This is because one of the requirements of the Internal Revenue Code of 1986, as amended, for a REIT is that it distributes 90% of its taxable income, excluding net capital gains, to its shareholders. This, in turn, requires the Operating Partnership to make distributions to its unitholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend or make equity investments and on conditions in the capital markets generally. Although we believe that we will be able to finance any investments we may wish to make in the foreseeable future, there can be no assurance that new financing will be available or available on acceptable terms. For information about our available sources of funds, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and the notes to the consolidated financial statements in this Annual Report on Form 10-K.
We depend on dividends and distributions from our direct and indirect subsidiaries. The creditors and preferred equity holders of these subsidiaries are entitled to amounts payable to them by the subsidiaries before the subsidiaries may pay any dividends or distributions to us.
Substantially all of Vornado’s assets are held through its Operating Partnership that holds substantially all of its properties and assets through subsidiaries. The Operating Partnership’s cash flow is dependent on cash distributions to it by its subsidiaries, and in turn, substantially all of Vornado’s cash flow is dependent on cash distributions to it by the Operating Partnership. The creditors of each of Vornado’s direct and indirect subsidiaries are entitled to payment of that subsidiary’s obligations to them, when due and payable, before distributions may be made by that subsidiary to its equity holders. Thus, the Operating Partnership’s ability to make distributions to its equity holders depends on its subsidiaries’ ability first to satisfy their obligations to their creditors and then to make distributions to the Operating Partnership. Likewise, Vornado’s ability to pay dividends to its holders of common and preferred shares depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its preferred units and then to make distributions to Vornado.
Furthermore, the holders of preferred units of the Operating Partnership are entitled to receive preferred distributions before payment of distributions to the Operating Partnership’s equity holders, including Vornado. Thus, Vornado’s ability to pay cash dividends to its equity holders and satisfy its debt obligations depends on the Operating Partnership’s ability first to satisfy its obligations to its creditors and make distributions to holders of its preferred units and then to its equity holders, including Vornado. As of December 31, 2020, there were four series of preferred units of the Operating Partnership not held by Vornado with a total liquidation value of $54,571,000.
In addition, Vornado’s participation in any distribution of the assets of any of its direct or indirect subsidiaries upon the liquidation, reorganization or insolvency is only after the claims of the creditors, including trade creditors and preferred equity holders, are satisfied.
We have a substantial amount of indebtedness that could affect our future operations.
As of December 31, 2020, our consolidated mortgages and unsecured indebtedness, excluding related premium, discount and deferred financing costs, net, totaled $7.4 billion. We are subject to the risks normally associated with debt financing, including the risk that our cash flow from operations will be insufficient to meet our required debt service. Our debt service costs generally will not be reduced if developments in the market or at our properties, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from our properties. Should such events occur, our operations may be adversely affected. If a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.
We have outstanding debt, and the amount of debt and its cost may increase and refinancing may not be available on acceptable terms.
We rely on both secured and unsecured, variable rate and non-variable rate debt to finance acquisitions and development activities and for working capital. If we are unable to obtain debt financing or refinance existing indebtedness upon maturity, our financial condition and results of operations would likely be adversely affected. In addition, the cost of our existing debt may increase, especially in the case of a rising interest rate environment, and we may not be able to refinance our existing debt in sufficient amounts or on acceptable terms. If the cost or amount of our indebtedness increases or we cannot refinance our debt in sufficient amounts or on acceptable terms, we are at risk of credit ratings downgrades and default on our obligations that could adversely affect our financial condition and results of operations.
Failure to hedge effectively against interest rate changes may adversely affect results of operations.
The interest rate hedge instruments we use to manage some of our exposure to interest rate volatility involve risk and counterparties may fail to perform under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to interest rate changes and when existing interest rate hedges terminate, we may incur increased costs in putting in place further interest rate hedges. Failure to hedge effectively against interest rate changes may adversely affect our results of operations.

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Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities.
The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the applicable lender, to further mortgage the applicable property or to discontinue insurance coverage. Our unsecured indebtedness and debt that we may obtain in the future may contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense, and fixed charges, and that require us to maintain a certain ratio of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. In addition, failure to comply with our covenants could cause a default under the applicable debt instrument, and we may then be required to repay such debt with capital from such other sources or give possession of a secured property to the lender. Under those circumstances, other sources of capital may not be available to us or may be available only on unattractive terms.
A downgrade in our credit ratings could materially and adversely affect our business and financial condition.
Our credit rating and the credit ratings assigned to our debt securities and our preferred shares could change based upon, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and any rating could be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant such action. Moreover, these credit ratings are not recommendations to buy, sell or hold our common shares or any other securities. If any of the credit rating agencies that have rated our securities downgrades or lowers its credit rating, or if any credit rating agency indicates that it has placed any such rating on a “watch list” for a possible downgrading or lowering, or otherwise indicates that its outlook for that rating is negative, such action could have a material adverse effect on our costs and availability of funding, which could in turn have a material adverse effect on our financial condition, results of operations, cash flows, the trading/redemption price of our securities, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our equity holders.
RISK RELATED TO OUR ORGANIZATION AND STRUCTURE
Vornado’s Amended and Restated Declaration of Trust (the “declaration of trust”) sets limits on the ownership of its shares.
Generally, for Vornado to maintain its qualification as a REIT under the Internal Revenue Code, not more than 50% in value of the outstanding shares of beneficial interest of Vornado may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of Vornado’s taxable year. The Internal Revenue Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under Vornado’s declaration of trust, as amended, no person may own more than 6.7% of the outstanding common shares of any class, or 9.9% of the outstanding preferred shares of any class, with some exceptions for persons who held common shares in excess of the 6.7% limit before Vornado adopted the limit and other persons approved by Vornado’s Board of Trustees. In addition, our declaration of trust includes restrictions on ownership of our common shares and preferred shares to preserve our status as a "domestically controlled qualified investment entity" within the meaning of Section 897 (h)(4)(B) of the Internal Revenue Code of 1986, as amended. These restrictions on transferability and ownership may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of equity holders.
The Maryland General Corporation Law (the “MGCL”) contains provisions that may reduce the likelihood of certain takeover transactions.
The MGCL imposes conditions and restrictions on certain “business combinations” (including, among other transactions, a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or issuance of equity securities) between a Maryland REIT and certain persons who beneficially own at least 10% of the corporation’s stock (an “interested shareholder”). Unless approved in advance by the board of trustees of the trust, or otherwise exempted by the statute, such a business combination is prohibited for a period of five years after the most recent date on which the interested shareholder became an interested shareholder. After such five-year period, a business combination with an interested shareholder must be: (a) recommended by the board of trustees of the trust, and (b) approved by the affirmative vote of at least (i) 80% of the trust’s outstanding shares entitled to vote and (ii) two-thirds of the trust’s outstanding shares entitled to vote which are not held by the interested shareholder with whom the business combination is to be effected, unless, among other things, the trust’s common shareholders receive a “fair price” (as defined by the statute) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for his or her shares.
In approving a transaction, Vornado’s Board of Trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the Board of Trustees. Vornado’s Board of Trustees has adopted a resolution exempting any business combination between Vornado and any trustee or officer of Vornado or its affiliates. As a result, any trustee or officer of Vornado or its affiliates may be able to enter into business combinations with Vornado that may not be in the best interest of our equity holders. With respect to business combinations with other persons, the business combination provisions of the MGCL may have the effect of delaying, deferring or preventing a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our equity holders. The business combination statute may discourage others from trying to acquire control of Vornado and increase the difficulty of consummating any offer.
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Title 3, Subtitle 8 of the MGCL permits our Board of Trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain takeover defenses, including adopting a classified board or increasing the vote required to remove a trustee. Such takeover defenses may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide our common shareholders with the opportunity to realize a premium over the then current market price.
Vornado may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.
Vornado’s declaration of trust authorizes the Board of Trustees to:
cause Vornado to issue additional authorized but unissued common shares or preferred shares;
classify or reclassify, in one or more series, any unissued preferred shares;
set the preferences, rights and other terms of any classified or reclassified shares that Vornado issues; and
increase, without shareholder approval, the number of shares of beneficial interest that Vornado may issue.
Vornado’s Board of Trustees could establish a series of preferred shares whose terms could delay, deter or prevent a change in control of Vornado, and therefore of the Operating Partnership, or other transaction that might involve a premium price or otherwise be in the best interest of our equity holders, although Vornado’s Board of Trustees does not now intend to establish a series of preferred shares of this kind. Vornado’s declaration of trust and bylaws contain other provisions that may delay, deter or prevent a change in control of Vornado or other transaction that might involve a premium price or otherwise be in the best interest of our equity holders.
We may change our policies without obtaining the approval of our equity holders.
Our operating and financial policies, including our policies with respect to acquisitions of real estate or other companies, growth, operations, indebtedness, capitalization, dividends and distributions, are exclusively determined by Vornado’s Board of Trustees. Accordingly, our equity holders do not control these policies.
Steven Roth and Interstate Properties may exercise substantial influence over us. They and some of Vornado’s other trustees and officers have interests or positions in other entities that may compete with us.
As of December 31, 2020, Interstate Properties, a New Jersey general partnership, and its partners beneficially owned an aggregate of approximately 7.0% of the common shares of beneficial interest of Vornado and 26.1% of the common stock of Alexander’s, which is described below. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the three partners of Interstate Properties. Mr. Roth is the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, the managing general partner of Interstate Properties, and the Chairman of the Board of Directors and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are Trustees of Vornado and Directors of Alexander’s.
Because of these overlapping interests, Mr. Roth and Interstate Properties and its partners may have substantial influence over Vornado, and therefore over the Operating Partnership. In addition, certain decisions concerning our operations or financial structure may present conflicts of interest among Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other equity holders. In addition, Mr. Roth, Interstate Properties and its partners, and Alexander’s currently and may in the future engage in a wide variety of activities in the real estate business which may result in conflicts of interest with respect to matters affecting us, such as which of these entities or persons, if any, may take advantage of potential business opportunities, the business focus of these entities, the types of properties and geographic locations in which these entities make investments, potential competition between business activities conducted, or sought to be conducted, competition for properties and tenants, possible corporate transactions such as acquisitions and other strategic decisions affecting the future of these entities.
We manage and lease the real estate assets of Interstate Properties under a management agreement for which we receive an annual fee equal to 4% of annual base rent and percentage rent. See Note 23 – Related Party Transactions to our consolidated financial statements in this Annual Report on Form 10-K for additional information.
There may be conflicts of interest between Alexander’s and us.
As of December 31, 2020, we owned 32.4% of the outstanding common stock of Alexander’s. Alexander’s is a REIT that has seven properties, which are located in the greater New York metropolitan area. In addition to the 2.3% that they indirectly own through Vornado, Interstate Properties, which is described above, and its partners owned 26.1% of the outstanding common stock of Alexander’s as of December 31, 2020. Mr. Roth is the Chairman of the Board of Trustees and Chief Executive Officer of Vornado, the managing general partner of Interstate Properties, and the Chairman of the Board of Directors and Chief Executive Officer of Alexander’s. Messrs. Wight and Mandelbaum are Trustees of Vornado and Directors of Alexander’s and general partners of Interstate Properties. Ms. Mandakini Puri and Dr. Richard West are Trustees of Vornado and Directors of Alexander’s. In addition, Matthew Iocco, our Executive Vice President – Chief Accounting Officer, is the Chief Financial Officer of Alexander’s.
We manage, develop and lease Alexander’s properties under management, development and leasing agreements under which we receive annual fees from Alexander’s. These agreements are described in Note 7 - Investments in Partially Owned Entities to our consolidated financial statements in this Annual Report on Form 10-K.
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RISKS RELATED TO OUR COMMON SHARES AND OPERATING PARTNERSHIP CLASS A UNITS
The trading price of Vornado’s common shares has been volatile and may continue to fluctuate. 
The trading price of Vornado’s common shares has been volatile and may continue to fluctuate widely as a result of several factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations have in the past and may in the future adversely affect the market price of Vornado’s common shares and the redemption price of the Operating Partnership’s Class A units. In particular, the market price of our common shares has been further adversely impacted since March 2020 due to the COVID-19 pandemic. These factors include:
our financial condition and performance;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
our dividend policy;
the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income securities;
uncertainty and volatility in the equity and credit markets;
fluctuations in interest rates;
changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
failure to meet analysts’ revenue or earnings estimates;
speculation in the press or investment community;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of institutional investor interest in us;
the extent of short-selling of Vornado common shares and the shares of our competitors;
fluctuations in the stock price and operating results of our competitors;
general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;
domestic and international economic factors unrelated to our performance;
changes in tax laws and rules; and
all other risk factors addressed elsewhere in this Annual Report on Form 10-K.
A significant decline in Vornado’s stock price could result in substantial losses for our equity holders.
Vornado has many shares available for future sale, which could hurt the market price of its shares and the redemption price of the Operating Partnership’s units.
The interests of equity holders could be diluted if we issue additional equity securities. As of December 31, 2020, Vornado had authorized but unissued 58,645,321 common shares of beneficial interest, $.04 par value, and 58,386,598 preferred shares of beneficial interest, no par value; of which 21,582,407 common shares are reserved for issuance upon redemption of Class A Operating Partnership units, convertible securities and employee stock options and 11,200,000 preferred shares are reserved for issuance upon redemption of preferred Operating Partnership units. Any shares not reserved may be issued from time to time in public or private offerings or in connection with acquisitions. In addition, common and preferred shares reserved may be sold upon issuance in the public market after registration under the Securities Act or under Rule 144 under the Securities Act or other available exemptions from registration. We cannot predict the effect that future sales of Vornado’s common and preferred shares or Operating Partnership Class A and preferred units will have on the market prices of our securities.
 In addition, under Maryland law, Vornado’s Board of Trustees has the authority to increase the number of authorized shares without shareholder approval.
Loss of our key personnel could harm our operations and adversely affect the value of our common shares and Operating Partnership Class A units.
We are dependent on the efforts of Steven Roth, the Chairman of the Board of Trustees and Chief Executive Officer of Vornado. While we believe that we could find a replacement for him and other key personnel, the loss of their services could harm our operations and adversely affect the value of our securities.
RISKS RELATED TO REGULATORY COMPLIANCE
Vornado may fail to qualify or remain qualified as a REIT and may be required to pay federal income taxes at corporate rates.
Although we believe that Vornado will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, Vornado may fail to remain so qualified. Qualifications are governed by highly technical and complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations and depend on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative
18


interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT. If, with respect to any taxable year, Vornado fails to maintain its qualification as a REIT and does not qualify under statutory relief provisions, Vornado could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on its taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax. If Vornado had to pay federal income tax, the amount of money available to distribute to equity holders and pay its indebtedness would be reduced for the year or years involved, and Vornado would not be required to make distributions to shareholders in that taxable year and in future years until it was able to qualify as a REIT and did so. In addition, Vornado would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless Vornado were entitled to relief under the relevant statutory provisions.
We may face possible adverse federal tax audits and changes in federal tax laws, which may result in an increase in our tax liability.
In the normal course of business, certain entities through which we own real estate either have undergone or may undergo tax audits. Although we believe that we have substantial arguments in favor of our positions, in some instances there is no controlling precedent or interpretive guidance. There can be no assurance that audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.
    At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended, including with respect to our hotel ownership structure. We cannot predict if or when any new U.S. federal income tax law, regulation, or administrative interpretation, or any amendment to any existing U.S. federal income tax law, Treasury regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. Vornado, its taxable REIT subsidiaries, and our securityholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, Treasury regulation or administrative interpretation.
We may face possible adverse state and local tax audits and changes in state and local tax law.
Because Vornado is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but we are subject to certain state and local taxes. In the normal course of business, certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. There can be no assurance that audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations.
From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes including changes in laws, regulations and administration of property and transfer taxes. If such changes occur, we may be required to pay additional taxes on our assets or income. These increased tax costs could adversely affect our financial condition and results of operations and the amount of cash available for the payment of dividends and distributions to our security holders.
Compliance or failure to comply with the Americans with Disabilities Act ("ADA") or other safety regulations and requirements could result in substantial costs.
ADA generally requires that public buildings, including our properties, meet certain Federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the Federal government or the award of damages to private litigants and/or legal fees to their counsel. From time to time persons have asserted claims against us with respect to some of our properties under the ADA, but to date such claims have not resulted in any material expense or liability. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations, as well as the amount of cash available for distribution to equity holders.
Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that will affect our cash flow and results of operations.
We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate.
Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The
19


presence of contamination or the failure to remediate contamination may also impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. Our predecessor companies may be subject to similar liabilities for activities of those companies in the past. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure to contamination at or from our properties.
 Each of our properties has been subject to varying degrees of environmental assessment. To date, these environmental assessments have not revealed any environmental condition material to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in clean-up or compliance requirements could result in significant costs to us.
In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage (such as a “carbon tax”). These costs or taxes could increase our operating costs and decrease the cash available to pay our obligations or distribute to equity holders.
GENERAL RISKS
The occurrence of cyber incidents, or a deficiency in our cyber security, as well as other disruptions of our IT networks and related systems, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships or reputation, all of which could negatively impact our financial results.
We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons who access our systems from inside or outside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although we have not experienced cyber incidents that are individually, or in the aggregate, material, we have experienced cyber attacks in the past, which have thus far been mitigated by preventative, detective, and responsive measures that we have put in place. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Unauthorized parties, whether within or outside our company, may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed to not be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
A security breach or other significant disruption involving our IT networks and related systems could disrupt the proper functioning of our networks and systems and therefore our operations and/or those of certain of our tenants; result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes; result in our inability to maintain the building systems relied upon by our tenants for the efficient use of their leased space; require significant management attention and resources to remedy any damages that result; subject us to litigation claims for breach of contract, damages, credits, fines, penalties, governmental investigations and enforcement actions or termination of leases or other agreements; or damage our reputation among our tenants and investors generally. Any or all of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.
A cyber attack or systems failure could interfere with our ability to comply with financial reporting requirements, which could adversely affect us. A cyber attack could also compromise the confidential information of our employees, tenants, customers and vendors. A successful attack could disrupt and materially affect our business operations, including damaging relationships with tenants, customers and vendors. Any compromise of our information security systems could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information (which
20


may be confidential, proprietary and/or commercially sensitive in nature) and a loss of confidence in our security measures, which could harm our business.
Competition for acquisitions may reduce the number of acquisition opportunities available to us and increase the costs of those acquisitions.
We may acquire properties when we are presented with attractive opportunities. We may face competition for acquisition opportunities from other well-capitalized investors, including publicly traded and privately held REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, sovereign wealth funds, pension trusts, partnerships and individual investors, which may adversely affect us because that competition may cause an increase in the purchase price for a desired acquisition property or result in a competitor acquiring the desired property instead of us.
If we are unable to successfully acquire additional properties, our ability to grow our business could be adversely affected. In addition, increases in the cost of acquisition opportunities could adversely affect our results of operations.
Changes in the method pursuant to which the LIBOR rates are determined and phasing out of LIBOR after 2021 may affect our financial results.
The chief executive of the United Kingdom Financial Conduct Authority ("FCA"), which regulates the London Interbank Offered Rate ("LIBOR"), previously announced that the FCA intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. In response, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. In November 2020, the ICE Benchmark Administration Limited, the benchmark administrator for USD LIBOR rates, proposed extending the publication of certain commonly-used USD LIBOR settings until June 30, 2023 and the FCA issued a statement supporting such proposal. In connection with this proposal, certain U.S. banking regulators issued guidance strongly encouraging banks to generally cease entering into new contracts referencing USD LIBOR as soon as practicable and in any event by December 31, 2021. It is not possible to predict the effect of these changes, including when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets.
We have outstanding debt and derivatives with variable rates that are indexed to LIBOR. In the transition from the use of LIBOR to SOFR or other alternatives, the level of interest payments we incur may change. In addition, although certain of our LIBOR based obligations provide for alternative methods of calculating the interest rate payable on certain of our obligations (including transition to an alternative benchmark rate) if LIBOR is not reported and we have been entering into amendments to certain of our financing agreements to provide for alternative benchmark rates if LIBOR is discontinued, uncertainty as to the extent and manner of future changes may result in interest rates and/or payments that are higher than or lower than or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligations if LIBOR was available in its current form. Use of alternative interest rates or other LIBOR reforms could result in increased volatility or a tightening of credit markets which could adversely affect our ability to obtain cost-effective financing. In addition, the transition of our existing LIBOR financing agreements to alternative benchmarks may result in unanticipated changes to the overall interest rate paid on our liabilities.
Some of our potential losses may not be covered by insurance.
For our properties (except Farley), we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $235,000,000 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 and effective February 15, 2021, 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 $1,759,257 and 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.
For Farley, we maintain general liability insurance with limits of $100,000,000 per occurrence, and builder’s risk insurance including coverage for existing property and development activities of $2.8 billion per occurrence and in the aggregate. We maintain coverage for certified and non-certified terrorism acts with limits of $1.85 billion and $1.17 billion per occurrence, respectively, and in the aggregate.
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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 debt instruments, consisting of mortgage loans secured by our properties, 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 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.
ITEM 1B.     UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this Annual Report on Form 10-K.
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ITEM 2.     PROPERTIES
We operate in two reportable segments: New York and Other. The following pages provide details of our real estate properties as of December 31, 2020.
    Square Feet
NEW YORK SEGMENT
Property
%
Ownership
Type%
Occupancy
 In ServiceUnder
Development
or Not
Available
for Lease
Total
Property
PENN1 (ground leased through 2098)(1)
100.0 %Office / Retail85.4 % 2,202,000 343,000 2,545,000 
1290 Avenue of the Americas70.0 %Office / Retail98.7 % 2,118,000 — 2,118,000 
PENN2100.0 %Office / Retail100.0 % 433,000 1,187,000 1,620,000 
909 Third Avenue (ground leased through 2063)(1)
100.0 %Office98.6 % 1,350,000 — 1,350,000 
280 Park Avenue(2)
50.0 %Office / Retail97.3 % 1,262,000 — 1,262,000 
Independence Plaza, Tribeca (1,327 units)(2)
50.1 %Retail / Residential100.0 %(3)1,245,000 13,000 1,258,000 
770 Broadway100.0 %Office / Retail99.3 % 1,182,000 — 1,182,000 
PENN11100.0 %Office / Retail99.4 % 1,153,000 — 1,153,000 
90 Park Avenue100.0 %Office / Retail98.8 % 956,000 — 956,000 
One Park Avenue(2)
55.0 %Office / Retail99.2 % 943,000 — 943,000 
888 Seventh Avenue (ground leased through 2067)(1)
100.0 %Office / Retail90.6 % 885,000 — 885,000 
100 West 33rd Street100.0 %Office100.0 % 859,000 — 859,000 
Farley Office and Retail
      (ground and building leased through 2116)(1)
95.0 %Office / Retail(4)— 844,000 844,000 
330 West 34th Street (65.2% ground leased through 2149)(1)
100.0 %Office / Retail73.0 % 724,000 — 724,000 
85 Tenth Avenue(2)
49.9 %Office / Retail71.4 % 627,000 — 627,000 
650 Madison Avenue(2)
20.1 %Office / Retail96.7 % 601,000 — 601,000 
350 Park Avenue100.0 %Office / Retail97.9 % 574,000 — 574,000 
150 East 58th Street(5)
100.0 %Office / Retail89.4 % 544,000 — 544,000 
7 West 34th Street(2)
53.0 %Office / Retail99.6 % 477,000 — 477,000 
33-00 Northern Boulevard (Center Building)100.0 %Office99.6 % 471,000 — 471,000 
595 Madison Avenue100.0 %Office / Retail77.7 % 333,000 — 333,000 
640 Fifth Avenue(2)
52.0 %Office / Retail95.7 % 315,000 — 315,000 
50-70 W 93rd Street (325 units)(2)
49.9 %Residential84.6 % 283,000 — 283,000 
Manhattan Mall100.0 %Retail13.4 % 256,000 — 256,000 
40 Fulton Street100.0 %Office / Retail75.7 % 251,000 — 251,000 
4 Union Square South100.0 %Retail94.5 % 204,000 — 204,000 
61 Ninth Avenue (2 buildings) (ground leased through 2115)(1)(2)
45.1 %Office / Retail94.5 % 192,000 — 192,000 
260 Eleventh Avenue (ground leased through 2114)(1)
100.0 %Office100.0 % 184,000 — 184,000 
512 W 22nd Street(2)
55.0 %Office / Retail42.0 % 173,000 — 173,000 
825 Seventh Avenue51.2 %
Office (2) / Retail
(4)— 169,000 169,000 
1540 Broadway(2)
52.0 %Retail100.0 % 161,000 — 161,000 
Paramus100.0 %Office85.2 % 129,000 — 129,000 
666 Fifth Avenue (2)(6)
52.0 %Retail100.0 % 114,000 — 114,000 
1535 Broadway(2)
52.0 %Retail / Theatre98.2 % 107,000 — 107,000 
57th Street (2 buildings)(2)
50.0 %Office / Retail87.8 % 103,000 — 103,000 
689 Fifth Avenue(2)
52.0 %Office / Retail85.3 % 98,000 — 98,000 
478-486 Broadway (2 buildings) (10 units)100.0 %Retail / Residential100.0 %(3)35,000 53,000 88,000 
150 West 34th Street100.0 %Retail100.0 % 78,000 — 78,000 
510 Fifth Avenue100.0 %Retail51.5 % 66,000 — 66,000 
655 Fifth Avenue(2)
50.0 %Retail100.0 % 57,000 — 57,000 
155 Spring Street100.0 %Retail97.3 % 50,000 — 50,000 
435 Seventh Avenue100.0 %Retail100.0 % 43,000 — 43,000 
________________________________________
See notes on page 25.
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ITEM 2.     PROPERTIES – CONTINUED
   Square Feet
NEW YORK SEGMENT – CONTINUED
Property
%
Ownership
Type%
Occupancy
In ServiceUnder
Development
or Not
Available
for Lease
Total
Property
692 Broadway100.0 %Retail100.0 % 36,000 — 36,000 
606 Broadway50.0 %Office / Retail100.0 % 36,000 — 36,000 
697-703 Fifth Avenue(2)
44.8 %Retail100.0 % 26,000 — 26,000 
759-771 Madison Avenue (40 East 66th Street (5 units))100.0 %Retail / Residential76.1 %(3)26,000 — 26,000 
1131 Third Avenue100.0 %Retail100.0 %23,000 — 23,000 
131-135 West 33rd Street100.0 %Retail100.0 % 23,000 — 23,000 
715 Lexington Avenue100.0 %Retail100.0 % 10,000 12,000 22,000 
828-850 Madison Avenue100.0 %Retail100.0 % 13,000 5,000 18,000 
443 Broadway100.0 %Retail100.0 % 16,000 — 16,000 
334 Canal Street (4 units)100.0 %Retail / Residential100.0 %(3)15,000 — 15,000 
537 West 26th Street100.0 %Event space— %— 14,000 14,000 
304 Canal Street (4 units)100.0 %Retail / Residential100.0 %(3)13,000 — 13,000 
677-679 Madison Avenue (8 units)100.0 %Retail / Residential100.0 %(3)13,000 — 13,000 
431 Seventh Avenue100.0 %Retail100.0 % 10,000 — 10,000 
138-142 West 32nd Street100.0 %Retail100.0 % 8,000 — 8,000 
148 Spring Street100.0 %Retail72.7 % 8,000 — 8,000 
339 Greenwich Street100.0 %Retail100.0 %8,000 — 8,000 
150 Spring Street (1 unit)100.0 %Retail / Residential100.0 %(3)7,000 — 7,000 
966 Third Avenue100.0 %Retail100.0 % 7,000 — 7,000 
968 Third Avenue(2)
50.0 %Retail100.0 % 7,000 — 7,000 
137 West 33rd Street100.0 %Retail100.0 % 3,000 — 3,000 
57th Street(2)
50.0 %Land(4)— — — 
Eighth Avenue and 34th Street100.0 %Land(4)— — — 
Other (3 buildings)100.0 %Retail84.8 %16,000 — 16,000 
Hotel Pennsylvania(7)
100.0 %Hoteln/a — 1,400,000 1,400,000 
Alexander's, Inc.:       
731 Lexington Avenue(2)
32.4 %Office / Retail99.0 % 1,075,000 — 1,075,000 
Rego Park II, Queens (6.6 acres)(2)
32.4 %Retail96.3 % 609,000 — 609,000 
Rego Park I, Queens (4.8 acres)(2)
32.4 %Retail100.0 % 260,000 78,000 338,000 
The Alexander Apartment Tower, Queens (312 units)(2)
32.4 %Residential82.4 % 255,000 — 255,000 
Flushing, Queens (1.0 acre ground leased through 2037)(1)(2)
32.4 %Retail100.0 % 167,000 — 167,000 
Paramus, New Jersey (30.3 acres
ground leased to IKEA through 2041)(1)(2)
32.4 %Land100.0 % — — — 
Rego Park III, Queens (3.4 acres)(2)
32.4 %Land(4)— — — 
Total New York Segment 92.7 % 24,528,000 4,118,000 28,646,000 
Our Ownership Interest  92.1 % 18,777,000 3,935,000 22,712,000 
________________________________________
See notes on page 25.

24


ITEM 2.     PROPERTIES – CONTINUED
   Square Feet
OTHER SEGMENT
Property
%
Ownership
Type%
Occupancy
In ServiceUnder
Development
or Not
Available
for Lease
Total
Property
theMART:      
theMART, Chicago100.0 %Office / Retail / Trade show / Showroom89.5 %3,673,000 — 3,673,000 
Piers 92 and 94 (New York) (ground and building leased through 2110)(1)
100.0 %Trade show / Other— %— 208,000 208,000 
Other (2 properties)(2)
50.0 %Retail100.0 %19,000 — 19,000 
Total theMART  89.5 %3,692,000 208,000 3,900,000 
Our Ownership Interest   89.5 %3,683,000 208,000 3,891,000 
555 California Street:      
555 California Street70.0 %Office / Retail98.1 %1,506,000 — 1,506,000 
315 Montgomery Street70.0 %Office / Retail100.0 %235,000 — 235,000 
345 Montgomery Street70.0 %Office / Retail(4)— 78,000 78,000 
Total 555 California Street  98.4 %1,741,000 78,000 1,819,000 
Our Ownership Interest   98.4 %1,218,000 55,000 1,273,000 
Vornado Capital Partners Real Estate Fund ("Fund")(8) :
  
Crowne Plaza Times Square, NY (0.64 acres owned in
     fee; 0.18 acres ground leased through 2187 and
     0.05 acres ground leased through 2035) (1)(9)
75.3 %Office / Retail / Hotel86.7 % 246,000 — 246,000 
Lucida, 86th Street and Lexington Avenue, NY
(ground leased through 2082)(1) (39 units)
100.0 %Retail / Residential100.0 %(3)157,000 — 157,000 
1100 Lincoln Road, Miami, FL100.0 %Retail / Theatre85.0 %130,000 — 130,000 
501 Broadway, NY100.0 %Retail100.0 % 9,000 — 9,000 
Total Real Estate Fund  88.9 % 542,000  542,000 
Our Ownership Interest   88.0 % 155,000  155,000 
Other:     
Rosslyn Plaza, VA (197 units)(2)
46.2 %Office / Residential68.1 %(3)685,000 304,000 989,000 
Fashion Centre Mall, VA(2)
7.5 %Retail87.4 %868,000 — 868,000 
Washington Tower, VA(2)
7.5 %Office75.0 %170,000 — 170,000 
Wayne Towne Center, Wayne, NJ (ground leased through
     2064)(1)
100.0 %Retail100.0 %638,000 48,000 686,000 
Annapolis, MD (ground leased through 2042)(1)
100.0 %Retail100.0 %128,000 — 128,000 
Atlantic City, NJ (11.3 acres ground leased through 2070 to
MGM Growth Properties for a portion of the Borgata Hotel
and Casino complex)
100.0 %Land100.0 %— — — 
Total Other  87.0 %2,489,000 352,000 2,841,000 
Our Ownership Interest   92.8 %1,154,000 188,000 1,342,000 
________________________________________
(1)Term assumes all renewal options exercised, if applicable.
(2)Denotes property not consolidated in the accompanying consolidated financial statements and related financial data included in the Annual Report on Form 10-K.
(3)Excludes residential occupancy statistics.
(4)Properties under development or to be developed.
(5)Includes 962 Third Avenue (the Annex building to 150 East 58th Street) 50.0% ground leased through 2118(1).
(6)75,000 square feet is leased from 666 Fifth Avenue Office Condominium.
(7)Closed beginning April 1, 2020 and therefore square footage was taken out of service.
(8)We own a 25% interest in the Fund. The ownership percentage in this section represents the Fund's ownership in the underlying assets.
(9)We own a 32.9% economic interest through the Fund and the Crowne Plaza Joint Venture.

25


NEW YORK
    As of December 31, 2020, our New York segment consisted of 28.6 million square feet in 79 properties. The 28.6 million square feet is comprised of 20.6 million square feet of Manhattan office in 33 properties, 2.7 million square feet of Manhattan street retail in 65 properties, 1,989 units in 10 residential properties, the 1.4 million square foot Hotel Pennsylvania, and our 32.4% interest in Alexander’s, which owns seven properties in the greater New York metropolitan area. The New York segment also includes 10 garages totaling 1.7 million square feet (4,875 spaces).
    New York lease terms generally range from five to seven years for smaller tenants to as long as 20 years for major tenants, and may provide for extension options at market rates. Leases typically provide for periodic step‑ups in rent over the term of the lease and pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. Electricity is provided to tenants on a sub-metered basis or included in rent based on surveys and adjusted for subsequent utility rate increases. Leases also typically provide for free rent and tenant improvement allowances for all or a portion of the tenant’s initial construction costs of its premises.
    As of December 31, 2020, the occupancy rate for our New York segment was 92.1%.
Occupancy and weighted average annual rent per square foot (in service):
Office:     
   Vornado's Ownership Interest
 As of December 31,Total
Property
Square Feet
Square FeetOccupancy
Rate
Weighted
Average Annual Escalated
Rent Per
Square Foot
 2020(1)18,361,000 15,413,000 93.4 %$79.05 
 2019(2)(3)19,070,000 16,195,000 96.9 %76.26 
 201819,858,000 16,632,000 97.2 %74.04 
 201720,256,000 16,982,000 97.1 %71.09 
 201620,227,000 16,962,000 96.3 %68.90 
Retail:     
   Vornado's Ownership Interest
 As of December 31,Total
Property
Square Feet
Square FeetOccupancy
Rate
Weighted
Average Annual Escalated
Rent Per
Square Foot
 20202,275,000 1,805,000 78.8 %$226.38 
 2019(2)2,300,000 1,842,000 94.5 %209.86 
 20182,648,000 2,419,000 97.3 %228.43 
 20172,720,000 2,471,000 96.9 %217.17 
 20162,672,000 2,464,000 97.1 %213.85 
Occupancy and average monthly rent per unit (in service):
Residential:     
   Vornado's Ownership Interest
 As of December 31,Number of UnitsNumber of UnitsOccupancy
Rate
Average Monthly
Rent Per Unit
 20201,989 954 83.9 %$3,719 
20191,991 955 97.0 %3,889 
20181,999 963 96.6 %3,803 
20172,009 981 96.7 %3,722 
20162,004 977 95.7 %3,576 
________________________________________
(1)782,000 square feet at PENN2 was placed under redevelopment during 2020.
(2)Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
(3)149,000 square feet at PENN2 was placed under redevelopment during 2019.

26


NEW YORK – CONTINUED
Tenants accounting for 2% or more of revenues:
TenantSquare Feet
Leased
2020 RevenuesPercentage of
New York
Total
Revenues
Percentage
of Total
Revenues
IPG & affiliates968,000 $61,517,000 5.0 %4.0 %
Facebook(1)
757,000 57,390,000 4.7 %3.8 %
Equitable Financial Life Insurance Company505,000 42,926,000 3.5 %2.8 %
Neuberger Berman Group LLC412,000 34,704,000 2.8 %2.3 %
Macy's367,000 42,618,000 3.5 %2.8 %
Ziff Brothers Investments, Inc.219,000 32,885,000 2.7 %2.2 %
Verizon Media Group327,000 30,038,000 2.5 %2.0 %
________________________________________
(1)Excludes lease at Farley Office for 730,000 square feet (694,000 at our share) not yet commenced.

2020 rental revenue by tenants’ industry:
IndustryPercentage
Office: 
Financial Services18 %
Communications%
Technology%
Advertising/Marketing%
Legal Services%
Insurance%
Real Estate%
Family Apparel%
Government%
Engineering, Architect, & Surveying%
Banking%
Entertainment and Electronics%
Publishing%
Health Services%
Pharmaceutical%
Other%
 85 %
Retail: 
Family Apparel%
Women's Apparel%
Restaurants%
Banking%
Department Stores%
Luxury Retail%
Other%
 15 %
  
Total100 %

27


NEW YORK – CONTINUED
Lease expirations as of December 31, 2020, assuming none of the tenants exercise renewal options:
 Number of Expiring Leases
Square Feet of Expiring Leases(1)
 Percentage of
New York Square Feet
Weighted Average Annual
Rent of Expiring Leases
 
Year TotalPer Square Foot 
Office:       
Month to month1032,000 0.2%$2,407,000 $75.22  
202195742,000 5.1%60,263,000 81.22 (2)
202282726,000 5.0%49,817,000 68.62  
2023(3)
851,847,000 12.8%164,053,000 88.82 
20241031,430,000 9.9%118,402,000 82.80  
202566813,000 5.6%65,293,000 80.31  
2026861,425,000 9.9%106,625,000 74.82  
2027781,165,000 8.1%85,100,000 73.05  
202847907,000 6.3%63,221,000 69.70  
202936648,000 4.5%54,375,000 83.91  
203036594,000 4.1%45,412,000 76.45  
Retail:       
Month to month1430,000 2.7%$4,405,000 $146.83  
20211670,000 6.2%13,551,000 193.59 (4)
202214116,000 10.3%8,524,000 73.48  
20231336,000 3.2%25,137,000 698.25  
202418202,000 18.0%45,730,000 226.39  
20251033,000 2.9%12,448,000 377.21  
20261270,000 6.2%25,350,000 362.14  
20271230,000 2.7%22,381,000 746.03  
20281123,000 2.0%12,835,000 558.04  
20291246,000 4.1%20,285,000 440.98  
203020159,000 14.1%20,262,000 127.43  
________________________________________
(1)Excludes storage, vacancy and other.
(2)Based on current market conditions, we expect to re-lease this space at rents between $75 to $85 per square foot.
(3)Excludes the expiration of 492,000 square feet at 909 Third Avenue for U.S. Post Office as we assume the exercise of all renewal options through 2038 given the below-market rent on their options.
(4)Based on current market conditions, we expect to re-lease this space at rents between $150 to $175 per square foot.

Alexander’s
As of December 31, 2020, we own 32.4% of the outstanding common stock of Alexander’s, which owns seven properties in the greater New York metropolitan area aggregating 2.4 million square feet, including 731 Lexington Avenue, the 1.3 million square foot Bloomberg L.P. headquarters building. Alexander’s had $1,164,544,000 of outstanding debt as of December 31, 2020, of which our pro rata share was $377,312,000, none of which is recourse to us.
Hotel Pennsylvania
We own the Hotel Pennsylvania which is located in New York City on Seventh Avenue at 33rd Street in the heart of the Penn District and consists of a hotel portion containing 1,000,000 square feet of hotel space with 1,700 rooms and a commercial portion containing 400,000 square feet of retail and office space. The Hotel Pennsylvania has been closed since April 1, 2020 as a result of the COVID-19 pandemic.
 For the Year Ended December 31,
20202019201820172016
Hotel Pennsylvania:
Average occupancy rateN/M82.1 %86.4 %87.3 %84.7 %
Average daily rateN/M$137.67 $138.35 $139.09 $134.38 
Revenue per available roomN/M113.08 119.47 121.46 113.84 


28


OTHER REAL ESTATE AND INVESTMENTS
theMART
As of December 31, 2020, we own the 3.7 million square foot theMART in Chicago, whose largest tenant is Motorola Mobility at 609,000 square feet, the lease of which is guaranteed by Google. theMART is encumbered by a $675,000,000 mortgage loan that bears interest at a fixed rate of 2.70% and matures in September 2021. As of December 31, 2020, theMART had an occupancy rate of 89.5% and a weighted average annual rent per square foot of $48.87.
555 California Street
As of December 31, 2020, we own a 70% controlling interest in a three-building office complex containing 1.8 million square feet, located at California and Montgomery Streets in San Francisco’s financial district (“555 California Street”). 555 California Street is encumbered by a $537,643,000 mortgage loan that bears interest at a fixed rate of 5.10% and matures in September 2021. As of December 31, 2020, 555 California Street had an occupancy rate of 98.4% and a weighted average annual rent per square foot of $83.83.
Vornado Capital Partners Real Estate Fund (the “Fund”) and Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza Joint Venture”)
As of December 31, 2020, we own a 25.0% interest in the Fund, which is in wind-down, and currently has four investments, one of which is the Crowne Plaza Times Square Hotel in which we also own an additional interest through the Crowne Plaza Joint Venture. We are the general partner and investment manager of the Fund. As of December 31, 2020, these four investments including the Crowne Plaza Joint Venture's share of the Crowne Plaza Times Square Hotel are carried on our consolidated balance sheet at an aggregate fair value of $3,739,000.
ITEM 3.     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 expected to have a material adverse effect on our financial position, results of operations or cash flows.
ITEM 4.     MINE SAFETY DISCLOSURES
Not applicable.

PART II
ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Vornado Realty Trust
Vornado’s common shares are traded on the New York Stock Exchange under the symbol “VNO.”
As of February 1, 2021, there were 858 holders of record of Vornado common shares.
Vornado Realty L.P.
There is no established trading market for the Operating Partnership's Class A units. Class A units that are not held by Vornado 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 unit holder is equal to the quarterly dividend paid to a Vornado common shareholder.
As of February 1, 2021, there were 912 Class A unitholders of record.
Recent Sales of Unregistered Securities
During 2020, the Operating Partnership issued 662,398 Class A units in connection with the exercise of awards 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, and consideration received included $5,897,859 in cash proceeds. Such units were issued in reliance on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.
From time to time, in connection with equity awards granted under our Omnibus Share Plan, we may withhold common shares for tax purposes or acquire common shares as part of the payment of the exercise price. Although we treat these as repurchases for certain financial statement purposes, these withheld or acquired shares are not considered by us as repurchases for this purpose.
Information relating to compensation plans under which Vornado’s equity securities are authorized for issuance is set forth under Part III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.
Recent Purchases of Equity Securities
None.
29


Performance Graph
The following graph is a comparison of the five-year cumulative return of Vornado’s common shares, the Standard & Poor’s 500 Index (the “S&P 500 Index”) and the National Association of Real Estate Investment Trusts’ (“NAREIT”) All Equity Index, a peer group index. The graph assumes that $100 was invested on December 31, 2015 in our common shares, the S&P 500 Index and the NAREIT All Equity Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph below.

vno-20201231_g1.jpg
201520162017201820192020
Vornado Realty Trust$100 $107 $103 $84 $97 $58 
S&P 500 Index100 112 136 130 171 203 
The NAREIT All Equity Index100 109 118 113 146 138 

ITEM 6.     SELECTED FINANCIAL DATA
Not applicable.
30


ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Page Number
Overview
Overview - Leasing Activity
Critical Accounting Policies
Net Operating Income At Share by Segment for the Years Ended December 31, 2020 and 2019
Results of Operations for the Year Ended December 31, 2020 Compared to December 31, 2019
Related Party Transactions
Liquidity and Capital Resources
Financing Activities and Contractual Obligations
Certain Future Cash Requirements
Cash Flows for the Year Ended December 31, 2020 Compared to December 31, 2019
Capital Expenditures for the Year Ended December 31, 2020
Capital Expenditures for the Year Ended December 31, 2019
Funds From Operations for the Years Ended December 31, 2020 and 2019


31




Introduction
The following discussion should be read in conjunction with the financial statements and related notes included under Part II, Item 8 of this Annual Report on Form 10-K.
Our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") within this section is focused on the years ended December 31, 2020 and 2019, including year-to-year comparisons between these years. Our MD&A for the year ended December 31, 2018, including year-to-year comparisons between 2019 and 2018, can be found in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
In May 2020, the SEC issued Final Rule Release No. 33-10786, which amends the financial statement requirements for acquisitions and dispositions of businesses, including real estate operations, and related pro forma financial information required under SEC Regulation S-X, Rule 3-05, 3-14 and 11-01. The final rule changed the income and investment tests within SEC Regulation S-X, Rule 1-02(w) used to calculate significance and also raises the significance threshold for reporting acquisitions and dispositions of real estate operations, and dispositions of a business from 10% to 20%. The revised income test will also apply to the evaluation of equity method investments for significance in accordance with SEC Regulation S-X, Rules 3-09, 4-08(g) and 10-01(b)(1). The final rule is applicable for fiscal years beginning after December 31, 2020, however early adoption is permitted. The Company adopted the provisions of the final rule in the fourth quarter of 2020.
In November 2020, the SEC issued Final Rule Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information. This rule, which became effective on February 10, 2021, amended certain SEC disclosure requirements in order to modernize, simplify and enhance certain financial disclosure requirements in Regulation S-K. Specifically, the amendments eliminate the requirement for Selected Financial Data, streamline the requirement to disclose Supplementary Financial Information, and amend Management's Discussion and Analysis "MD&A". The final rule is applicable for fiscal years beginning after December 31, 2020, however, early adoption on an Item-by-Item basis is permitted after February 10, 2021. We early adopted the amendments to two items resulting in the elimination of Item 301, Selected Financial Data, and the omission of Regulation S-K Item 302(a), Supplementary Financial Information. The amendments to Item 303 MD&A, will be adopted in our Form 10-K for the year ended December 31, 2021.
Overview
Vornado Realty Trust (“Vornado”) is a fully‑integrated real estate investment trust (“REIT”) and conducts its business through, and substantially all of its interests in properties are held by, Vornado Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Accordingly, Vornado’s cash flow and ability to pay dividends to its shareholders are dependent upon the cash flow of the Operating Partnership and the ability of its direct and indirect subsidiaries to first satisfy their obligations to creditors. Vornado is the sole general partner of, and owned approximately 92.8% of the common limited partnership interest in the Operating Partnership as of December 31, 2020. All references to the “Company,” “we,” “us” and “our” mean collectively Vornado, the Operating Partnership and those subsidiaries consolidated by Vornado.
We own and operate office and retail properties with a concentration in the New York City metropolitan area. In addition, we have a 32.4% interest in Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX), which owns seven properties in the greater New York metropolitan area, as well as interests in other real estate and investments.
Our business objective is to maximize Vornado shareholder value, which we measure by the total return provided to our 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 December 31, 2020:
 
Total Return(1)
 VornadoOffice REITMSCI
Three-month12.7 %16.9 %11.5 %
One-year(40.5 %)(18.4 %)(7.6 %)
Three-year(43.7 %)(8.4 %)11.0 %
Five-year(42.3 %)9.2 %26.7 %
Ten-year(9.6 %)64.8 %122.0 %
____________________
(1)Past performance is not necessarily indicative of future performance.
We intend to achieve this objective by continuing to pursue our investment philosophy and to execute 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;
developing and redeveloping properties to increase returns and maximize value; and
investing in operating companies that have a significant real estate component.
32


Overview - continued
We expect to finance our growth, acquisitions and investments using internally generated funds and 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 which may be willing to accept lower returns on their investments. Principal factors of competition are rents charged, sales prices, attractiveness of location, the quality of the property and the breadth and the quality of services provided. Our success depends upon, among other factors, trends of the global, national, regional and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation, population and employment trends. See “Risk Factors” in Item 1A for additional information regarding these factors.
Our business has been adversely affected as a result of the COVID-19 pandemic and the preventive measures taken to curb the spread of the virus. Some of the effects on us include the following:
With the exception of grocery stores and other "essential" businesses, many of our retail tenants closed their stores in March 2020 and began reopening when New York City entered phase two of its reopening plan on June 22, 2020, however, there continue to be limitations on occupancy and other restrictions that affect their ability to resume full operations.
While our buildings remain open, many of our office tenants are working remotely.
We have closed the Hotel Pennsylvania. In connection with the closure, we accrued $9,246,000 of severance for furloughed Hotel Pennsylvania union employees and recognized a corresponding $3,145,000 income tax benefit for the year ended December 31, 2020.
We cancelled trade shows at theMART from late March through the remainder of 2020 and expect to resume in 2021.
Because certain of our development projects were deemed "non-essential," they were temporarily paused in March 2020 due to New York State executive orders and resumed once New York City entered phase one of its state mandated reopening plan on June 8, 2020.
As of April 30, 2020, we placed 1,803 employees on furlough, which included 1,293 employees of Building Maintenance Services LLC ("BMS"), 414 employees at the Hotel Pennsylvania and 96 corporate staff employees. As of February 10, 2021, 50% of furloughed employees have returned to work. The remaining employees still on furlough are from BMS and the Hotel Pennsylvania.
Effective April 1, 2020, our executive officers waived portions of their annual base salary for the remainder of 2020.
Effective April 1, 2020, each non-management member of our Board of Trustees agreed to forgo their $75,000 annual cash retainer for the remainder of 2020.
While we believe our tenants are required to pay rent under their leases and we have commenced legal proceedings against certain tenants that have failed to pay rent under their leases, in limited circumstances, we have agreed to and may continue to agree to rent deferrals and rent abatements for certain of our tenants. We have made a policy election in accordance with the Financial Accounting Standards Board (“FASB”) Staff Q&A which provides relief in accounting for leases during the COVID-19 pandemic, allowing us to continue recognizing rental revenue on a straight-line basis for rent deferrals, with no impact to revenue recognition, and to recognize rent abatements as a reduction to rental revenue in the period granted.
For the quarter ended December 31, 2020, we collected 95% (97% including rent deferrals) of rent due from our tenants, comprised of 97% (99% including rent deferrals) from our office tenants and 88% (89% including rent deferrals) from our retail tenants. Rent deferrals generally require repayment in monthly installments over a period not to exceed twelve months.
Based on our assessment of the probability of rent collection of our lease receivables, we have written off $51,571,000 of receivables arising from the straight-lining of rents for the year ended December 31, 2020, including the JCPenney retail lease at Manhattan Mall and the New York & Company, Inc. office lease at 330 West 34th Street. Both tenants have filed for Chapter 11 bankruptcy and rejected their leases during 2020. In addition, we have written off $22,546,000 of tenant receivables deemed uncollectible for the year ended December 31, 2020. These write-offs resulted in a reduction of lease revenues and our share of income from partially owned entities. Prospectively, revenue recognition for lease receivables deemed uncollectible will be based on actual amounts received.
In light of the evolving health, social, economic, and business environment, governmental regulation or mandates, and business disruptions that have occurred and may continue to occur, the impact of the COVID-19 pandemic on our financial condition and operating results remains highly uncertain but has been and may continue to be material. The impact on us includes lower rental income and potentially lower occupancy levels at our properties which will result in less cash flow available for operating costs, to pay our indebtedness and for distribution to our shareholders. During 2020, we experienced a decrease in cash flow from operations due to the COVID-19 pandemic, including reduced collections of rents billed to certain of our tenants, the closure of Hotel Pennsylvania, the cancellation of trade shows at theMART, and lower revenues from BMS and signage. In addition, we recognized $409,060,000 of non-cash impairment losses, net of noncontrolling interests, related to our investment in Fifth Avenue and Times Square JV which are included in “(loss) income from partially owned entities” and $236,286,000 of non-cash impairment losses primarily on wholly owned retail assets which are included in “impairment losses and transaction related costs, net” on our consolidated statements of income for the year ended December 31, 2020. The value of our real estate assets may continue to decline, which may result in additional non-cash impairment charges in future periods and that impact could be material.
33


Overview - continued
Year Ended December 31, 2020 Financial Results Summary
Net loss attributable to common shareholders for the year ended December 31, 2020 was $348,744,000, or $1.83 per diluted share, compared to net income attributable to common shareholders of $3,097,806,000, or $16.21 per diluted share, for the year ended December 31, 2019. The years ended December 31, 2020 and 2019 include certain items that impact net (loss) income attributable to common shareholders, which are listed in the table below. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased net loss attributable to common shareholders by $341,837,000, or $1.79 per diluted share, for the year ended December 31, 2020 and increased net income attributable to common shareholders by $2,921,090,000, or $15.29 per diluted share, for the year ended December 31, 2019.
Funds from operations ("FFO") attributable to common shareholders plus assumed conversions for the year ended December 31, 2020 was $750,522,000, or $3.93 per diluted share, compared to $1,003,398,000, or $5.25 per diluted share, for the year ended December 31, 2019. The years ended December 31, 2020 and 2019 include certain items that impact FFO, which are listed in the table on the following page. The aggregate of these items, net of amounts attributable to noncontrolling interests, increased FFO by $267,478,000, or $1.40 per diluted share, for the year ended December 31, 2020 and $337,191,000, or $1.76 per diluted share, for the year ended December 31, 2019.
The following table reconciles the difference between our net (loss) income attributable to common shareholders and our net (loss) income attributable to common shareholders, as adjusted:
(Amounts in thousands)For the Year Ended December 31,
 20202019
Certain expense (income) items that impact net (loss) income attributable to common shareholders:
Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $4,289 attributable to noncontrolling interests$409,060 $— 
After-tax net gain on sale of 220 Central Park South ("220 CPS") condominium units(332,099)(502,565)
Real estate impairment losses (primarily wholly owned retail assets in 2020)236,286 8,065 
608 Fifth Avenue lease liability extinguishment gain in 2020 and impairment loss and related write-offs in 2019(70,260)101,092 
Our share of loss from real estate fund investments63,114 48,808 
Severance and other reduction-in-force related expenses23,368 — 
Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 202013,369 — 
Transaction related costs7,150 4,613 
Severance accrual related to Hotel Pennsylvania closure, net of $3,145 of income tax benefit6,101 — 
Mark-to-market decrease in Pennsylvania Real Estate Investment Trust ("PREIT") common shares (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020)4,938 21,649 
Net gain on transfer to Fifth Avenue and Times Square retail JV, net of $11,945 attributable to noncontrolling interests— (2,559,154)
Net gains on sale of real estate (primarily our 25% interest in 330 Madison Avenue in 2019)— (178,769)
Net gain from sale of Urban Edge Properties ("UE") common shares (sold on March 4, 2019)— (62,395)
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022— 22,540 
Mark-to-market increase in Lexington Realty Trust ("Lexington") common shares (sold on March 1, 2019)— (16,068)
Other5,436 (7,505)
366,463 (3,119,689)
Noncontrolling interests' share of above adjustments(24,626)198,599 
Total of certain expense (income) items that impact net (loss) income attributable to common shareholders$341,837 $(2,921,090)

34


Overview - continued
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 Year Ended December 31,
 20202019
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$(332,099)$(502,565)
608 Fifth Avenue lease liability extinguishment gain in 2020 and impairment loss and related write-offs in 2019(70,260)77,156 
Our share of loss from real estate fund investments63,114 48,808 
Severance and other reduction-in-force related expenses23,368 — 
Credit losses on loans receivable resulting from a new GAAP accounting standard effective January 1, 202013,369 — 
Transaction related costs7,150 4,613 
Severance accrual related to Hotel Pennsylvania closure, net of $3,145 of income tax benefit6,101 — 
Prepayment penalty in connection with redemption of $400 million 5.00% senior unsecured notes due January 2022— 22,540 
Other2,510 (10,732)
(286,747)(360,180)
Noncontrolling interests' share of above adjustments19,269 22,989 
Total of certain (income) expense items that impact FFO attributable to common shareholders plus assumed conversions, net$(267,478)$(337,191)
Same Store Net Operating Income ("NOI") At Share
The percentage (decrease) increase in same store NOI at share and same store NOI at share - cash basis of our New York segment, theMART and 555 California Street are summarized below.
Year Ended December 31, 2020 compared to December 31, 2019:TotalNew YorktheMART555
California Street
Same store NOI at share % (decrease) increase(13.8)%(12.7)%(32.5)%0.6 %
Same store NOI at share - cash basis % (decrease) increase(8.3)%(6.3)%(29.5)%0.9 %
Calculations of same store NOI at share, reconciliations of our net income to NOI at share, NOI at share - cash basis and FFO and the reasons we consider these non-GAAP financial measures useful are provided in the following pages of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
220 CPS
During the year ended December 31, 2020, we closed on the sale of 35 condominium units at 220 CPS for net proceeds of $1,049,360,000 resulting in a financial statement net gain of $381,320,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income in Part II, Item 8 of this Annual Report on Form 10-K. In connection with these sales, $49,221,000 of income tax expense was recognized on our consolidated statements of income in Part II, Item 8 of this Annual Report on Form 10-K. From inception to December 31, 2020, we have closed on the sale of 100 units for net proceeds of $2,869,492,000 resulting in financial statement net gains of $1,066,937,000.
Dispositions
On January 23, 2020, we sold all of our 6,250,000 common shares of PREIT, realizing net proceeds of $28,375,000. We recorded a $4,938,000 loss (mark-to-market decrease) for the year ended December 31, 2020.
Financings
Unsecured Term Loan
On February 28, 2020, we increased our unsecured term loan balance to $800,000,000 (from $750,000,000) by exercising an accordion feature. Pursuant to an existing swap agreement, $750,000,000 of the loan bears interest at a fixed rate of 3.87% through October 2023, and the balance of $50,000,000 floats at a rate of LIBOR plus 1.00% (1.15% as of December 31, 2020). The entire $800,000,000 will float thereafter for the duration of the loan through February 2024.
Other Financings
On August 12, 2020, we amended the $700,000,000 mortgage loan on 770 Broadway, a 1.2 million square foot Manhattan office building, to extend the term one year through March 2022.

35


Overview - continued
Financings - continued
Other Financings - continued
On September 14, 2020, Alexander's, Inc. (NYSE: ALX) ("Alexander's"), in which we have a 32.4% ownership interest, amended and extended the $350,000,000 mortgage loan on the retail condominium of 731 Lexington Avenue. Under the terms of the amendment, Alexander's paid down the loan by $50,000,000 to $300,000,000, extended the maturity date to August 2025 and guaranteed the interest payments and certain leasing costs. The principal of the loan is non-recourse to Alexander's. The interest-only loan is at LIBOR plus 1.40% (1.55% as of December 31, 2020) which has been swapped to a fixed rate of 1.72%.
On October 15, 2020, we completed a $500,000,000 refinancing of PENN11, a 1.2 million square foot Manhattan office building. The interest-only loan carries a rate of LIBOR plus 2.75% (2.90% as of December 31, 2020) and matures in October 2023, with two one-year extension options. The loan replaces the previous $450,000,000 loan that bore interest at a fixed rate of 3.95% and was scheduled to mature in December 2020.
On October 23, 2020, Alexander's completed a $94,000,000 financing of The Alexander, a 312-unit residential building that is part of Alexander's residential and retail complex located in Rego Park, Queens, New York. The interest-only loan has a fixed rate of 2.63% and matures in November 2027.
On November 2, 2020, we repaid the $52,476,000 mortgage loan on our land under a portion of the Borgata Hotel and Casino complex. The 10-year fixed rate amortizing loan bore interest at 5.14% and was scheduled to mature in February 2021.
Preferred Securities
On November 24, 2020, Vornado sold 12,000,000 5.25% Series N cumulative redeemable preferred shares at a price of $25.00 per share, pursuant to an effective registration statement. Vornado received aggregate net proceeds of $291,182,000, after underwriters' discount and issuance costs and contributed the net proceeds to the Operating Partnership in exchange for 12,000,000 5.25% Series N preferred units (with economic terms that mirror those of the Series N preferred shares). Dividends on the Series N preferred shares/units are cumulative and payable quarterly in arrears. The Series N preferred shares/units are not convertible into, or exchangeable for, any of our properties or securities. On or after five years from the date of issuance (or sooner under limited circumstances), Vornado may redeem the Series N preferred shares/units at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the date of redemption. The Series N preferred shares/units have no maturity date and will remain outstanding indefinitely unless redeemed by Vornado.
Leasing Activity For The Year Ended December 31, 2020
The leasing activity and related statistics in the tables 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.
2,231,000 square feet of New York Office space (1,853,000 square feet at share) at an initial rent of $89.33 per square foot and a weighted average lease term of 14.4 years. Includes 730,000 square feet (694,000 at our share) for the new Facebook lease at Farley Office and 633,000 square feet (348,000 at our share) for the New York University long-term renewal at One Park Avenue. The initial rent of $89.33 excludes the rent on 174,000 square feet (all at share) as the starting rent for this space will be determined later in 2021 based on fair market value. The changes in the GAAP and cash mark-to-market rent on the 899,000 square feet of second generation space were positive 11.0% and 4.6%, respectively. Tenant improvements and leasing commissions were $8.75 per square foot per annum, or 9.8% of initial rent.
238,000 square feet of New York Retail space (184,000 square feet at share) at an initial rent of $136.29 per square foot and a weighted average lease term of 4.0 years. The changes in the GAAP and cash mark-to-market rent on the 159,000 square feet of second generation space were positive 1.3% and negative 5.9%, respectively. Tenant improvements and leasing commissions were $16.80 per square foot per annum, or 12.3% of initial rent.
379,000 square feet at theMART (all at share) at an initial rent of $49.74 per square foot and a weighted average lease term of 8.5 years. The changes in the GAAP and cash mark-to-market rent on the 374,000 square feet of second generation space were positive 1.5% and negative 1.9%, respectively. Tenant improvements and leasing commissions were $3.89 per square foot per annum, or 7.8% of initial rent.
371,000 square feet at 555 California Street (260,000 square feet at share) at an initial rent of $108.92 per square foot and a weighted average lease term of 8.0 years. The initial rent of $108.92 excludes the rent on a ten-year renewal option for 247,000 square feet (173,000 square feet at share) as the starting rent for this space will be determined in 2024 based on fair market value. The changes in the GAAP and cash mark-to-market rent on the 87,000 square feet of second generation space were positive 54.7% and 39.7%, respectively. Tenant improvements and leasing commissions were $6.94 per square foot per annum, or 6.4% of initial rent, excluding the ten-year renewal option for 247,000 square feet (173,000 square feet at share).
36


Overview - continued
Square footage (in service) and Occupancy as of December 31, 2020:
(Square feet in thousands) Square Feet (in service) 
 Number of
properties
Total
Portfolio
Our
Share
Occupancy %
New York:    
Office33 18,361 15,413 93.4 %
Retail (includes retail properties that are in the base of our office properties)65 2,275 1,805 78.8 %
Residential - 1,677 units1,526 793 83.9 %
Alexander's, including 312 residential units72,366 766 96.7 %
Hotel Pennsylvania (closed since April 1, 2020)1— — 
24,528 18,777 92.1 %
Other:    
theMART3,692 3,683 89.5 %
555 California Street1,741 1,218 98.4 %
Other11 2,489 1,154 92.8 %
  7,922 6,055  
Total square feet at December 31, 2020 32,450 24,832  

Square footage (in service) and Occupancy as of December 31, 2019:
(Square feet in thousands) Square Feet (in service) 
 Number of
properties
Total
Portfolio
Our
Share
Occupancy %
New York:    
Office35 19,070 16,195 96.9 %
Retail (includes retail properties that are in the base of our office properties)70 2,300 1,842 94.5 %
Residential - 1,679 units1,526 793 97.0 %
Alexander's, including 312 residential units72,230 723 96.5 %
Hotel Pennsylvania11,400 1,400 
26,526 20,953 96.7 %
Other:    
theMART3,826 3,817 94.6 %
555 California Street1,741 1,218 99.8 %
Other11 2,533 1,198 92.7 %
 8,100 6,233 
Total square feet at December 31, 201934,626 27,186 

37


Critical Accounting Policies
In preparing the consolidated financial statements we have made estimates and assumptions that affect the reported amounts of 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. We consider an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.
Set forth below is a summary of the accounting policies that we believe are critical to the preparation of our consolidated financial statements. The summary should be read in conjunction with the more complete discussion of our accounting policies included in Note 3 - Basis of Presentation and Significant Accounting Policies to our consolidated financial statements in this Annual Report on Form 10-K.
Real Estate
Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments which are on a relative fair value basis. We assess fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions, and could differ materially from actual results.
Our properties, including any related right-of-use assets and intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates, capital requirements, capitalization rates and discount rates that could differ materially from actual results.
Partially Owned Entities
We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider (i) whether the entity is a variable interest entity (“VIE”) in which we are the primary beneficiary or (ii) whether the entity is a voting interest entity in which we have a majority of the voting interests of the entity. We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. Management uses its judgement when determining if we are the primary beneficiary of a VIE. We generally do not control a partially owned entity if the approval of all of the partners/members is contractually required with respect to decisions that most significantly impact the performance of the partially owned entity. This includes decisions regarding operating/capital budgets, and the placement of new or additional financing secured by the assets of the venture, among others. We account for investments under the equity method when the requirements for consolidation are not met, and we have significant influence over the operations of the investee.
Investments in unconsolidated partially owned entities are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recorded when there is a decline in the fair value below the carrying value and we conclude such decline is other-than-temporary. An impairment loss is measured based on the excess of the carrying amount of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, ability to hold, and available information at the time the analyses are prepared. The ultimate realization of our investments in partially owned entities is dependent on a number of factors, including the performance of each investment and market conditions. If our estimates of the projected future cash flows, the nature of development activities for properties for which such activities are planned and the estimated fair value of the investment change based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Estimates of future cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, capital requirements, capitalization rates and discount rates that could differ materially from actual results.

38


Critical Accounting Policies - continued
Revenue Recognition
We have the following revenue sources and revenue recognition policies:
Rental revenues include revenues from the leasing of space at our properties to tenants, lease termination income, revenues from the Hotel Pennsylvania, trade shows and tenant services.
Revenues from the leasing of space at our properties to tenants includes (i) lease components, including fixed and variable lease payments, and nonlease components which include reimbursement of common area maintenance expenses, and (ii) reimbursement of real estate taxes and insurance expenses. As lessor, we have elected to combine the lease and nonlease components of our operating lease agreements and account for the components as a single lease component.
Revenues derived from fixed lease payments are recognized on a straight-line basis over the non-cancelable period of the lease, together with renewal options that are reasonably certain of being exercised. We commence rental revenue recognition when the underlying asset is available for use by the lessee.
Revenue derived from the reimbursement of real estate taxes, insurance expenses and common area maintenance expenses are generally recognized in the same period as the related expenses are incurred.
We have made a policy election in accordance with the FASB Staff Q&A allowing us to not account for COVID-19 related lease concessions as lease modifications. Accordingly, rent abatements are recognized as reductions to "rental revenues" during the period in which they were granted. Rent deferrals result in an increase to "tenant and other receivables" during the deferral period with no impact on revenue recognition. For any concessions that do not meet the guidance contained in the Q&A, the modification guidance in accordance with Accounting Standards Codification Topic 842, Leases will be applied. See Note 3 - Basis of Presentation and Significant Accounting Policies to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Lease termination income is recognized immediately if a tenant vacates or is recognized on a straight-line basis over the shortened remaining lease term.
Hotel revenue arising from the operation of Hotel Pennsylvania consists of room revenue, food and beverage revenue, and banquet revenue. Room revenue is recognized when the rooms are made available for the guest.
Trade shows revenue arising from the operation of trade shows is primarily booth rentals. This revenue is recognized upon the occurrence of the trade shows when the trade show booths are made available for use by the exhibitors.
Tenant services revenue arises from sub-metered electric, elevator, trash removal and other services provided to tenants at their request. This revenue is recognized as the services are transferred.
Fee and other income includes management, leasing and other revenue arising from contractual agreements with third parties or with partially owned entities and includes BMS cleaning, engineering and security services. This revenue is recognized as the services are transferred.
We evaluate on an individual lease basis whether it is probable that we will collect substantially all amounts due from our tenants. We recognize changes in the collectability assessment of our operating leases as adjustments to rental revenue. Management exercises judgment in assessing collectability and considers payment history, current credit status and publicly available information about the financial condition of the tenant, including the impact of COVID-19 on tenants' businesses, among other factors. Tenant receivables, including receivables arising from the straight-lining of rents, are written off when management deems that the collectability of substantially all future lease payments from a specific lease is not probable of collection, at which point, the Company will limit future rental revenues to cash received.
Income Taxes
Vornado operates in a manner intended to enable it to continue to qualify as a REIT under Sections 856‑860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT which distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. Vornado distributes to its shareholders 100% of its REIT taxable income and therefore, no provision for Federal income taxes is required. If Vornado fails to distribute the required amount of income to its shareholders, or fails to meet other REIT requirements, it may fail to qualify as a REIT which may result in substantial adverse tax consequences.
Recent Accounting Pronouncements
See Note 3 – Basis of Presentation and Significant Accounting Policies to our consolidated financial statements in this Annual Report on Form 10-K for a discussion concerning recent accounting pronouncements.
39



NOI At Share by Segment for the Years Ended December 31, 2020 and 2019
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. NOI at share - cash basis includes rent that has been deferred as a result of the COVID-19 pandemic. Rent deferrals generally require repayment in monthly installments over a period of time not to exceed twelve months.
Below is a summary of NOI at share and NOI at share - cash basis by segment for the years ended December 31, 2020 and 2019.
(Amounts in thousands)For the Year Ended December 31, 2020
TotalNew YorkOther
Total revenues$1,527,951 $1,221,748 $306,203 
Operating expenses(789,066)(640,531)(148,535)
NOI - consolidated738,885 581,217 157,668 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(72,801)(43,773)(29,028)
Add: NOI from partially owned entities306,495 296,447 10,048 
NOI at share972,579 833,891 138,688 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other46,246 36,715 9,531 
NOI at share - cash basis$1,018,825 $870,606 $148,219 
(Amounts in thousands)For the Year Ended December 31, 2019
Total
New York(1)
Other
Total revenues$1,924,700 $1,577,860 $346,840 
Operating expenses(917,981)(758,304)(159,677)
NOI - consolidated1,006,719 819,556 187,163 
Deduct: NOI attributable to noncontrolling interests in consolidated subsidiaries(69,332)(40,896)(28,436)
Add: NOI from partially owned entities322,390 294,168 28,222 
NOI at share1,259,777 1,072,828 186,949 
Non-cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other(6,060)(12,318)6,258 
NOI at share - cash basis$1,253,717 $1,060,510 $193,207 
________________________________________
(1)Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.


40



NOI At Share by Segment for the Years Ended December 31, 2020 and 2019 - continued
The elements of our New York and Other NOI at share for the years ended December 31, 2020 and 2019 are summarized below.
(Amounts in thousands)For the Year Ended December 31,
20202019
New York:
Office(1)(2)
$672,495 $724,526 
Retail(1)(3)
147,299 273,217 
Residential20,687 23,363 
Alexander's(4)
35,912 44,325 
Hotel Pennsylvania(5)
(42,502)7,397 
Total New York833,891 1,072,828 
Other:
theMART(6)
69,178 102,071 
555 California Street60,324 59,657 
Other investments(7)
9,186 25,221 
Total Other138,688 186,949 
NOI at share$972,579 $1,259,777 
________________________________________
(1)Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
(2)2020 includes $18,173 of non-cash write-offs of receivables arising from the straight-lining of rents, including the New York & Company, Inc. lease at 330 West 34th Street, and $6,702 of write-offs of tenant receivables deemed uncollectible.
(3)2020 includes $25,876 of non-cash write-offs of receivables arising from the straight-lining of rents, including the JCPenney lease at Manhattan Mall, and $12,017 of write-offs of tenant receivables deemed uncollectible. 2019 includes $14,010 of non-cash write-offs of receivables arising from the straight-lining of rents.
(4)2020 includes $3,511 of non-cash write-offs of receivables arising from the straight-lining of rents and $1,335 of write-offs of tenant receivables deemed uncollectible.
(5)The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been closed since April 1, 2020 as a result of
the pandemic. 2020 includes a $9,246 severance accrual for furloughed union employees.
(6)The decrease in NOI at share is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. Additionally, 2020 includes $2,722 of non-cash write-offs of receivables arising from the straight-lining of rents and $1,742 of write-offs of tenant receivables deemed uncollectible.
(7)2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and UE (sold on March 4, 2019).

41



NOI At Share by Segment for the Years Ended December 31, 2020 and 2019 - continued
The elements of our New York and Other NOI at share - cash basis for the years ended December 31, 2020 and 2019 are summarized below.
(Amounts in thousands)For the Year Ended December 31,
20202019
New York:
Office(1)(2)
$691,755 $718,734 
Retail(1)(3)
158,686 267,655 
Residential19,369 21,894 
Alexander's(4)
42,737 45,093 
Hotel Pennsylvania(5)
(41,941)7,134 
Total New York870,606 1,060,510 
Other:
theMART(6)
76,251 108,130 
555 California Street60,917 60,156 
Other investments(7)
11,051 24,921 
Total Other148,219 193,207 
NOI at share - cash basis$1,018,825 $1,253,717 
________________________________________
(1)Reflects the transfer of 45.4% of common equity in the properties contributed to the Fifth Avenue and Times Square JV on April 18, 2019.
(2)2020 includes $6,702 of write-offs of tenant receivables deemed uncollectible.
(3)2020 includes $12,017 of write-offs of tenant receivables deemed uncollectible.
(4)2020 includes $1,335 of write-offs of tenant receivables deemed uncollectible.
(5)The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic. The Hotel Pennsylvania has been closed since April 1, 2020 as a result of the pandemic. 2020 includes a $9,246 severance accrual for furloughed union employees.
(6)The decrease in NOI at share - cash basis is primarily due to the effects of the COVID-19 pandemic, causing trade shows to be cancelled from late March 2020 through the remainder of the year. Additionally, 2020 includes $1,742 of write-offs of tenant receivables deemed uncollectible.
(7)2019 includes our share of PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and UE (sold on March 4, 2019).
42



Reconciliation of Net (Loss) Income to NOI At Share and NOI At Share - Cash Basis for the Years Ended December 31, 2020 and 2019
Below is a reconciliation of net (loss) income to NOI at share and NOI at share - cash basis for the years ended December 31, 2020 and 2019.
(Amounts in thousands)For the Year Ended December 31,
20202019
Net (loss) income$(461,845)$3,334,262 
Depreciation and amortization expense399,695 419,107 
General and administrative expense181,509 169,920 
Impairment losses and transaction related costs, net174,027 106,538 
Loss (income) from partially owned entities329,112 (78,865)
Loss from real estate fund investments226,327 104,082 
Interest and other investment loss (income), net5,499 (21,819)
Interest and debt expense229,251 286,623 
Net gain on transfer to Fifth Avenue and Times Square JV— (2,571,099)
Net gains on disposition of wholly owned and partially owned assets(381,320)(845,499)
Income tax expense36,630 103,439 
Loss from discontinued operations— 30 
NOI from partially owned entities306,495 322,390 
NOI attributable to noncontrolling interests in consolidated subsidiaries(72,801)(69,332)
NOI at share972,579 1,259,777 
Non cash adjustments for straight-line rents, amortization of acquired below-market leases, net and other46,246 (6,060)
NOI at share - cash basis$1,018,825 $1,253,717 
NOI At Share by Region
For the Year Ended December 31,
20202019
Region:
New York City metropolitan area87 %87 %
Chicago, IL%%
San Francisco, CA%%
100 %100 %

43


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019
Revenues
Our revenues were $1,527,951,000 for the year ended December 31, 2020 compared to $1,924,700,000 in the prior year, a decrease of $396,749,000. Below are the details of the decrease by segment:
(Amounts in thousands)    
(Decrease) increase due to:TotalNew York Other
Rental revenues:    
Acquisitions, dispositions and other$(5,085)$(3,505)$(1,580)
Development and redevelopment(73,297)(73,299)
Hotel Pennsylvania(1)
(84,287)(84,287)— 
Trade shows(2)
(27,925)— (27,925)
Properties transferred to Fifth Avenue and Times Square JV(100,554)(100,554)— 
Same store operations(98,439)(3)(79,845)(18,594)
 (389,587)(341,490)(48,097)
Fee and other income: 
BMS cleaning fees(19,138)(21,246)(4)2,108 
Management and leasing fees5,874 5,814 60 
Properties transferred to Fifth Avenue and Times Square JV(388)(388)— 
Other income6,490 1,198 5,292 
 (7,162)(14,622)7,460 
Total decrease in revenues$(396,749)$(356,112)$(40,637)
________________________________________
See notes on the following page.

44


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019 - continued
Expenses
Our expenses were $1,550,740,000 for the year ended December 31, 2020 compared to $1,625,155,000 in the prior year, a decrease of $74,415,000. Below are the details of the decrease by segment:
(Amounts in thousands)   
(Decrease) increase due to:TotalNew YorkOther
Operating:   
Acquisitions, dispositions and other$(10,055)$(8,786)$(1,269)
Development and redevelopment(35,478)(35,478)— 
Non-reimbursable expenses1,327 1,408 (81)
Hotel Pennsylvania(1)
(34,399)(34,399)— 
Trade shows(2)
(9,613)— (9,613)
BMS expenses(12,016)(14,124)(4)2,108 
Properties transferred to Fifth Avenue and Times Square JV(21,615)(21,615)— 
Same store operations(7,066)(4,779)(2,287)
 (128,915)(117,773)(11,142)
Depreciation and amortization:
Acquisitions, dispositions and other(3,735)(3,744)
Development and redevelopment(214)(214)— 
Properties transferred to Fifth Avenue and Times Square JV(25,119)(25,119)— 
Same store operations9,656 8,599 1,057 
 (19,412)(20,478)1,066 
General and administrative11,589 (5)4,231 7,358 
Benefit from deferred compensation plan liability(5,166)— (5,166)
Impairment Losses and transaction related costs, net67,489 (6)65,077 2,412 
Total decrease in expenses$(74,415)$(68,943)$(5,472)
____________________
(1)Closed since April 1, 2020 as a result of the COVID-19 pandemic. Operating expense for 2020 includes a $9,246 severance accrual for furloughed union employees.
(2)Cancelled trade shows at theMART from late March 2020 through the remainder of the year as a result of the pandemic.
(3)2020 includes $46,463 for the non-cash write-off of receivables arising from the straight-lining of rent, including the JCPenney retail lease at Manhattan Mall and the New York & Company, Inc. office lease at 330 West 34th Street, and $16,741 for the write-off of tenant receivables deemed uncollectible.
(4)Primarily due to a decrease in third party cleaning services provided to retail and office tenants as a result of the pandemic.
(5)Primarily due to $22,132 severance and other reduction-in-force related expenses in 2020, partially offset by (i) $8,444 non-cash stock-based compensation expense for the accelerated vesting of previously issued Operating Partnership units and Vornado restricted stock in 2019 due to the removal of the time-based vesting requirements for participants who have reached 65 years of age and (ii) $844 of lower non-cash stock-based compensation expense in 2020 for the time-based compensation granted in connection with the new leadership group announced in April 2019.
(6)Primarily due to $236,286 of non-cash impairment losses primarily related to wholly owned street retail assets in 2020, partially offset by (i) $101,360 of non-cash impairment losses, substantially 608 Fifth Avenue, recognized in the second quarter of 2019 and (ii) $70,260 of lease liability extinguishment gain related to 608 Fifth Avenue recognized in the second quarter of 2020.

45


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019 - continued
(Loss) Income from Partially Owned Entities
Below are the components of (loss) income from partially owned entities for the years ended December 31, 2020 and 2019.
(Amounts in thousands)Percentage Ownership at December 31, 2020For the Year Ended December 31,
 20202019
Our share of net (loss) income:   
Fifth Avenue and Times Square JV(1):
Non-cash impairment loss(2)
$(413,349)$— 
Return on preferred equity, net of our share of the expense37,357 27,586 
Equity in net income(3)
51.5%21,063 31,130 
(354,929)58,716 
Alexander's(4)
32.4%18,635 23,779 
Partially owned office buildings(5)
Various12,742 (3,443)
Other investments(6)
Various(5,560)(187)
$(329,112)$78,865 
____________________
(1)Entered into on April 18, 2019.
(2)See Note 7 - Investments in Partially Owned Entities to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
(3)2020 includes a $13,971 reduction in income related to a Forever 21 lease modification at 1540 Broadway and $3,125 of write-offs of lease receivables deemed uncollectible during 2020.
(4)2020 includes our $4,846 share of write-offs of lease receivables deemed uncollectible.
(5)Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue (sold on July 11, 2019), 512 West 22nd Street, 61 Ninth Avenue, 85 Tenth Avenue and others.
(6)Includes interests in Independence Plaza, Rosslyn Plaza, UE (sold on March 4, 2019), PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020) and others.
Loss from Real Estate Fund Investments 
Below are the components of the loss from our real estate fund investments for the years ended December 31, 2020 and 2019.
(Amounts in thousands)For the Year Ended December 31,
 20202019
Net unrealized loss on held investments$(226,107)$(106,109)
Net investment (loss) income(220)2,027 
Loss from real estate fund investments(226,327)(104,082)
Less loss attributable to noncontrolling interests in consolidated subsidiaries163,213 55,274 
Loss from real estate fund investments net of noncontrolling interests in consolidated subsidiaries$(63,114)$(48,808)

Interest and Other Investment (Loss) Income, net
Below are the components of interest and other investment (loss) income, net for the years ended December 31, 2020 and 2019.
(Amounts in thousands)For the Year Ended December 31,
 20202019
Credit losses on loans receivable(1)
$(13,369)$— 
Interest on cash and cash equivalents and restricted cash5,793 13,380 
Decrease in fair value of marketable securities(2)
(4,938)(5,533)
Interest on loans receivable3,384 6,326 
Dividends on marketable securities— 3,938 
Other, net3,631 3,708 
$(5,499)$21,819 
____________________
(1)See Note 3 - Basis of Presentation and Significant Accounting Policies and Note 14 - Fair Value Measurements to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
(2)2020 includes a $4,938 mark-to-market decrease in the fair value of our PREIT common shares (sold on January 23, 2020). 2019 includes (i) a $21,649 decrease in the fair value of our investment in PREIT, partially offset by (ii) a $16,068 mark-to market increase in the fair value of our Lexington common shares (sold on March 1, 2019).


46


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019 - continued
Interest and Debt Expense
Interest and debt expense was $229,251,000 for the year ended December 31, 2020, compared to $286,623,000 in the prior year, a decrease of $57,372,000. This decrease was primarily due to (i) $24,458,000 of lower interest expense resulting from lower average interest rates on our variable rate loans, (ii) $22,540,000 of expense in 2019 from debt prepayment costs relating to redemption of our $400,000,000 5.00% senior unsecured notes, (iii) $17,459,000 of lower interest expense resulting from the repayment of the mortgage payable of PENN2, (iv) $12,530,000 of lower interest expense resulting from the deconsolidation of mortgages payable of the properties contributed to Fifth Avenue and Times Square JV in April 2019, (v) $7,680,000 of lower interest expense resulting from the payoff of the 220 CPS loan, and (vi) $5,045,000 of lower interest expense from the redemption of the $400,000,000 5.00% senior unsecured notes in 2019, partially offset by $31,144,000 of lower capitalized interest and debt expense.
Net Gain on Transfer to Fifth Avenue and Times Square JV
During 2019, we recognized a $2,571,099,000 net gain from the transfer of common equity in the properties contributed to Fifth Avenue and Times Square JV, including the related step-up in our basis of the retained portion of the assets to fair value.
Net Gains on Disposition of Wholly Owned and Partially Owned Assets
Net gains on disposition of wholly owned and partially owned assets of $381,320,000 for the year ended December 31, 2020 consists of net gains on sale of 220 CPS condominium units. Net gains of $845,499,000 for the year ended December 31, 2019 primarily consist of (i) $604,393,000 of net gains on sale of 220 CPS condominium units, (ii) $159,292,000 net gain on sale of our 25% interest in 330 Madison Avenue, (iii) $62,395,000 net gain from the sale of all of our UE partnership units, and (iv) $19,477,000 net gain on sale of 3040 M Street.
Income Tax Expense
For the year ended December 31, 2020, we had income tax expense of $36,630,000, compared to $103,439,000 in the prior year, a decrease of $66,809,000. This decrease was primarily due to lower income tax expense from the sale of 220 CPS condominium units.
Net Loss Attributable to Noncontrolling Interests in Consolidated Subsidiaries
Net loss attributable to noncontrolling interests in consolidated subsidiaries was $139,894,000 for the year ended December 31, 2020, compared to $24,547,000 in the prior year, an increase of $115,347,000. This increase resulted primarily from the higher allocation of net loss to the noncontrolling interests in our real estate fund investments and $4,289,000 allocated to noncontrolling interests for the non-cash impairment loss recognized on our investment in Fifth Avenue and Times Square JV in 2020.
Net (Loss) Income Attributable to Noncontrolling Interests in the Operating Partnership (Vornado Realty Trust)
Net loss attributable to noncontrolling interests in the Operating Partnership was $24,946,000 for the year ended December 31, 2020, compared to net income of $210,872,000 in the prior year, a decrease in income of $235,818,000. 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 $51,739,000 for the year ended December 31, 2020, compared to $50,131,000 in the prior year, an increase of $1,608,000.
Preferred Unit Distributions of Vornado Realty L.P.
Preferred unit distributions were $51,904,000 for the year ended December 31, 2020, compared to $50,296,000 in the prior year, an increase of $1,608,000.

47


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019 - continued
Same Store Net Operating Income At Share
Same store NOI at share represents NOI at share from operations which are in service in both the current and prior year reporting periods. Same store NOI at share - cash basis is same store 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 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 NOI at share and same store 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 are reconciliations of NOI at share to same store NOI at share for our New York segment, theMART, 555 California Street and other investments for the year ended December 31, 2020 compared to December 31, 2019.
(Amounts in thousands)TotalNew YorktheMART555 California StreetOther
NOI at share for the year ended December 31, 2020$972,579 $833,891 $69,178 $60,324 $9,186 
Less NOI at share from:
Development properties(30,946)(30,946)— — — 
Hotel Pennsylvania (closed beginning April 1, 2020)33,146 33,146 — — — 
Other non-same store (income) expense, net(27,898)(18,361)(524)173 (9,186)
Same store NOI at share for the year ended December 31, 2020$946,881 $817,730 $68,654 $60,497 $— 
NOI at share for the year ended December 31, 2019$1,259,777 $1,072,828 $102,071 $59,657 $25,221 
Less NOI at share from:
Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(35,770)(35,770)— — — 
Dispositions(7,420)(7,420)— — — 
Development properties(68,063)(68,063)— — — 
Hotel Pennsylvania (closed beginning April 1, 2020)(13,212)(13,212)— — — 
Other non-same store (income) expense, net(36,827)(11,722)(354)470 (25,221)
Same store NOI at share for the year ended December 31, 2019$1,098,485 $936,641 $101,717 $60,127 $— 
(Decrease) increase in same store NOI at share for the year ended December 31, 2020 compared to December 31, 2019$(151,604)$(118,911)$(33,063)$370 $— 
% (decrease) increase in same store NOI at share(13.8)%(12.7)%(32.5)%0.6 %— %

48


Results of Operations – Year Ended December 31, 2020 Compared to December 31, 2019 - 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, theMART, 555 California Street and other investments for the year ended December 31, 2020 compared to December 31, 2019.
(Amounts in thousands)TotalNew YorktheMART555 California StreetOther
NOI at share - cash basis for the year ended December 31, 2020$1,018,825 $870,606 $76,251 $60,917 $11,051 
Less NOI at share - cash basis from:
Development properties(42,531)(42,531)— — — 
Hotel Pennsylvania (closed beginning April 1, 2020)32,576 32,576 — — — 
Other non-same store (income) expense, net(39,271)(27,672)(553)(11,051)
Same store NOI at share - cash basis for the year ended December 31, 2020$969,599 $832,979 $75,698 $60,922 $— 
NOI at share - cash basis for the year ended December 31, 2019$1,253,717 $1,060,510 $108,130 $60,156 $24,921 
Less NOI at share - cash basis from:
Change in ownership interests in properties contributed to Fifth Avenue and Times Square JV(32,905)(32,905)— — — 
Dispositions(8,219)(8,219)— — — 
Development properties(87,856)(87,856)— — — 
Hotel Pennsylvania (closed beginning April 1, 2020)(12,997)(12,997)— — — 
Other non-same store (income) expense, net(54,571)(29,207)(692)249 (24,921)
Same store NOI at share - cash basis for the year ended December 31, 2019$1,057,169 $889,326 $107,438 $60,405 $— 
(Decrease) increase in same store NOI at share - cash basis for the year ended December 31, 2020 compared to December 31, 2019$(87,570)$(56,347)$(31,740)$517 $— 
% (decrease) increase in same store NOI at share - cash basis(8.3)%(6.3)%(29.5)%0.9 %— %

49


Related Party Transactions
See Note 23 - Related Party Transactions to our consolidated financial statements in this Annual Report on Form 10-K for a discussion concerning related party transactions.
Liquidity and Capital Resources
Rental revenue 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 and distributions to unitholders of the Operating Partnership, as well as acquisition and development costs. During 2020, we have experienced a decrease in cash flow from operations due to the COVID-19 pandemic, including reduced collections of rents billed to certain of our tenants, the closure of Hotel Pennsylvania, the cancellation of trade shows at theMART through 2020, and lower revenues from BMS and signage. For the quarter ended December 31, 2020, we collected 95% (97% including rent deferrals) of rent due from our tenants, comprised of 97% (99% including rent deferrals) from our office tenants and 88% (89% including rent deferrals) from our retail tenants. Rent deferrals generally require repayment in monthly installments over a period not to exceed twelve months. While we believe that our tenants are required to pay rent under their leases, we have implemented and will continue to consider rent deferrals on a case-by-case basis. Other sources of liquidity to fund cash requirements include proceeds from debt financings, including mortgage loans, senior unsecured borrowings, unsecured term loans and unsecured revolving credit facilities; proceeds from the issuance of common and preferred equity; and asset sales.
As of December 31, 2020, we have $3.9 billion of liquidity comprised of $1.7 billion of cash and cash equivalents and restricted cash and $2.2 billion available on our $2.75 billion revolving credit facilities. The challenges posed by COVID-19 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 shareholders, debt amortization and recurring capital expenditures. Capital requirements for development expenditures and acquisitions may require funding from borrowings, equity offerings and/or asset sales. Consequently, the Company will continue to evaluate its liquidity and financial position on an ongoing basis.
We may from time to time purchase or retire outstanding debt securities 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.
Dividends
On January 20, 2021, Vornado declared a quarterly common dividend of $0.53 per share (an indicated annual rate of $2.12 per common share). This dividend, if declared by the Board of Trustees for all of 2021, would require Vornado to pay out approximately $406,000,000 of cash for common share dividends. In addition, during 2021, Vornado expects to pay approximately $66,000,000 of cash dividends on outstanding preferred shares and approximately $29,000,000 of cash distributions to unitholders of the Operating Partnership.
Financing Activities and Contractual Obligations
We have an effective shelf registration for the offering of our equity and debt securities that is not limited in amount due to our status as a “well-known seasoned issuer.” We have issued senior unsecured notes from a shelf registration statement that contain financial covenants that restrict our ability to incur debt, and that require us to maintain a level of unencumbered assets based on the level of our secured debt. Our unsecured revolving credit facilities contain financial covenants that require us to maintain minimum interest 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. Our unsecured revolving credit facilities also contain customary conditions precedent to borrowing, including representations and warranties, and contain customary events of default that could give rise to accelerated repayment, including such items as failure to pay interest or principal. As of December 31, 2020, we are in compliance with all of the financial covenants required by our senior unsecured notes and our unsecured revolving credit facilities.
50


Liquidity and Capital Resources - continued
Financing Activities and Contractual Obligations - continued
As of December 31, 2020, we had $1,624,482,000 of cash and cash equivalents and $2,161,451,000 of borrowing capacity under our unsecured revolving credit facilities, net of letters of credit of $13,549,000. A summary of our consolidated debt as of December 31, 2020 and 2019 is presented below.
(Amounts in thousands)As of December 31, 2020As of December 31, 2019
Consolidated debt:BalanceWeighted
Average
Interest Rate
BalanceWeighted
Average
Interest Rate
Variable rate$3,220,815 1.83%$1,643,500 3.09%
Fixed rate4,212,643 3.70%5,801,516 3.57%
Total7,433,458 2.89%7,445,016 3.46%
Deferred financing costs, net and other(34,462) (38,407) 
Total, net$7,398,996  $7,406,609  
Our consolidated outstanding debt, net of deferred financing costs and other, was $7,398,996,000 at December 31, 2020, a $7,613,000 decrease from the balance at December 31, 2019. During 2021 and 2022, $1,562,643,000 and $1,650,000,000, respectively, of our outstanding debt matures; we may refinance this maturing debt as it comes due or choose to repay it using cash and cash equivalents or our unsecured revolving credit facilities. We may also refinance or prepay other outstanding debt depending 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.
Below is a schedule of our contractual obligations at December 31, 2020.
(Amounts in thousands) Less than
1 Year
   
Contractual cash obligations(1) (principal and interest(2)):
Total1 – 3 Years3 – 5 YearsThereafter
Notes and mortgages payable$5,940,860 $2,737,058 $1,627,598 $1,160,108 $416,096 
Operating leases1,044,896 22,010 47,671 49,076 926,139 
Purchase obligations, primarily construction commitments609,600 609,600 — — — 
Senior unsecured notes due 2025513,656 15,750 31,500 466,406 — 
Unsecured term loan886,965 29,603 56,210 801,152 — 
Revolving credit facilities588,179 5,923 582,256 — — 
Other obligations(3)
549,861 7,230 15,252 18,396 508,983 
Total contractual cash obligations$10,134,017 $3,427,174 $2,360,487 $2,495,138 $1,851,218 
____________________
(1)Excludes committed tenant-related obligations as timing and amounts of payments are uncertain and may only be due upon satisfactory performance of certain conditions.
(2)Interest on variable rate debt is computed using rates in effect at December 31, 2020.
(3)Represents rent and fixed payments in lieu of real estate taxes due to Empire State Development ("ESD"), an entity of New York State, for Farley Office and Retail.
Details of 2020 financing activities are provided in the “Overview” of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Certain Future Cash Requirements
Capital Expenditures
The following table summarizes anticipated 2021 capital expenditures.
(Amounts in millions, except per square foot data)TotalNew YorktheMART555 California Street
Expenditures to maintain assets$100.0 $84.0 $6.0 $10.0 
Tenant improvements82.0 65.0 12.0 5.0 
Leasing commissions30.5 25.0 3.0 2.5 
Total recurring tenant improvements, leasing commissions and other capital expenditures$212.5 $174.0 $21.0 $17.5 
Square feet budgeted to be leased (in thousands) 1,000 250 150 
Weighted average lease term (years) 10.0 7.5 5.0 
Tenant improvements and leasing commissions:   
Per square foot $90.00 $60.00 $50.00 
Per square foot per annum 9.00 8.00 10.00 
    The table above excludes anticipated capital expenditures of each of our partially owned non-consolidated subsidiaries, as these entities fund their capital expenditures without additional equity contributions from us.
51


Liquidity and Capital Resources - continued
Development and Redevelopment Expenditures 
220 CPS
We are completing construction of a residential condominium tower containing 397,000 salable square feet at 220 CPS. The development cost of this project (exclusive of land cost) is estimated to be approximately $1.480 billion, of which $1.455 billion has been expended as of December 31, 2020.
Penn District
Farley
Our 95% joint venture (5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail, which will include approximately 844,000 rentable square feet of commercial space, comprised of approximately 730,000 square feet of office space and approximately 114,000 square feet of restaurant and retail space. The total development cost of this project is estimated to be approximately $1,120,000,000, an increase of $90,000,000, which is primarily due to higher projected tenant improvement allowances for the office, restaurant and retail space. As of December 31, 2020, $791,994,000 has been expended, which has been reduced by $88,000,000 of historic tax credit investor contributions (at our share).
The joint venture entered into a development agreement with ESD, an entity of New York State, to build the adjacent Moynihan Train Hall, with Vornado and Related each guaranteeing the joint venture's obligations. The joint venture entered into a design-build contract with Skanska Moynihan Train Hall Builders ("Skanska") pursuant to which they built the Moynihan Train Hall on the joint venture's behalf. Skanska substantially completed construction as of December 31, 2020, thereby fulfilling this obligation to ESD. The joint venture, which we consolidate on our consolidated balance sheets, leased the entire property during the construction period and pursuant to ASC 842-40-55, was required to recognize all development expenditures for Moynihan Train Hall. Accordingly, the development expenditures funded by governmental agencies were presented as “Moynihan Train Hall development expenditures” with a corresponding obligation recorded to “Moynihan Train Hall Obligation” on our consolidated balance sheets. On December 31, 2020, upon substantial completion of Moynihan Train Hall, the portions of the property not pertaining to the joint venture's commercial space were severed from its lease with ESD and we removed the "Moynihan Train Hall development expenditures" and the offsetting “Moynihan Train Hall obligation” from our consolidated balance sheets.
PENN1
We are redeveloping PENN1, a 2,545,000 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"), within the footprint of PENN1. Skanska USA Civil Northeast, Inc. will perform 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. The total development cost of our PENN1 project is estimated to be $450,000,000, an increase of $125,000,000, which is primarily due to the addition of the Concourse retail redevelopment project and sustainability initiatives, including the installation of triple pane high energy performance windows and the implementation of an electrification program to allow PENN1 to access more clean renewable electricity. As of December 31, 2020, $167,894,000 has been expended.
PENN2
We are redeveloping PENN2, a 1,795,000 square foot (as expanded) office building, located on the west side of Seventh Avenue between 31st and 33rd Street. The development cost of this project is estimated to be $750,000,000, of which $91,219,000 has been expended as of December 31, 2020.
We are also making districtwide improvements within the Penn District. The development cost of these improvements is estimated to be $100,000,000, of which $19,618,000 has been expended as of December 31, 2020.
Other
We are redeveloping a 78,000 square foot Class A office building at 345 Montgomery Street, a part of our 555 California Street complex in San Francisco (70.0% interest) located at the corner of California and Pine Street. The development cost of this project is estimated to be approximately $66,000,000, of which our share is $46,000,000. As of December 31, 2020, $55,261,000 has been expended, of which our share is $38,683,000.
We are redeveloping a 165,000 square foot office building at 825 Seventh Avenue, located at the corner of 53rd Street and Seventh Avenue (50.0% interest). The redevelopment cost of this project is estimated to be approximately $30,000,000, of which our share is $15,000,000. As of December 31, 2020, $26,508,000 has been expended, of which our share is $13,254,000.
We are also evaluating other development and redevelopment opportunities at certain of our properties in Manhattan including, in particular, the Penn District.
There can be no assurance that the above projects will be completed, completed on schedule or within budget.
52


Liquidity and Capital Resources - continued
Insurance
For our properties (except Farley), we maintain general liability insurance with limits of $300,000,000 per occurrence and per property, of which $235,000,000 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 and effective February 15, 2021, excluding communicable disease coverage. For the period February 15, 2020 through February 14, 2021, we and the insurance carriers for our all risk property policy have disagreements as to the applicability of a $2,300,000 sub-limit for communicable disease coverage across our properties. 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 $1,759,257 and 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.
For Farley, we maintain general liability insurance with limits of $100,000,000 per occurrence, and builder’s risk insurance including coverage for existing property and development activities of $2.8 billion per occurrence and in the aggregate. We maintain coverage for certified and non-certified terrorism acts with limits of $1.85 billion and $1.17 billion per occurrence, respectively, and in the aggregate.
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 debt instruments, consisting of mortgage loans secured by our properties, 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 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.

53


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 costs to us. 
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. In December 2020, following a trial, the court issued a tentative ruling in our favor. A final hearing was held on February 1, 2021 and we are awaiting a definitive ruling. On October 9, 2020, the successor to Regus PLC filed for bankruptcy in Luxembourg. We are actively pursuing claims relating to the guaranty against the successor to Regus PLC and its parent, in Luxembourg and other jurisdictions.
In November 2011, we entered into an agreement with the New York City Economic Development Corporation ("EDC") to lease Piers 92 and 94 (the "Piers") for a 49-year term with five 10-year renewal options. The non-recourse lease with a single-purpose entity calls for current annual rent payments of $2,000,000 with fixed rent steps through the initial term. We operate trade shows and special events at the Piers (and sublease to others for the same uses). In February 2019, an inspection revealed that the piles supporting Pier 92 were structurally unsound (an obligation of EDC to maintain) and we were issued an order by EDC to vacate the property. We continued to make the required lease payments through February 2020, with no abatement provided by EDC for the loss of our right to use Pier 92 or reimbursement for lost revenues. Beginning March 2020, as no resolution had been reached with EDC, we have not paid the monthly rents due under the non-recourse lease. As of December 31, 2020, we have a $47,473,000 lease liability and a $34,482,000 right-of-use asset recorded for this lease.
Our mortgage loans are non-recourse to us, 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. In addition, we have guaranteed the rent and payments in lieu of real estate taxes due to ESD, an entity of New York State, for Farley Office and Retail. As of December 31, 2020, the aggregate dollar amount of these guarantees and master leases is approximately $1,769,000,000. 
As of December 31, 2020, $13,549,000 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 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. 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.
Our 95% consolidated joint venture (5% is owned by Related) is developing Farley Office and Retail. In connection with the development of the property, the joint venture took in a historic tax credit investor partner. Under the terms of the historic tax credit arrangement, the joint venture is required to comply 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 Tax Credit Investor’s capital contributions. As of December 31, 2020, the Tax Credit Investor has made $92,400,000 in capital contributions. Vornado and Related have guaranteed certain of the joint venture’s 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 incentive allocation is subject to catch-up and clawback provisions. Accordingly, based on the December 31, 2020 fair value of the Fund assets, at liquidation we would be required to make a $29,800,000 payment to the limited partners, net of amounts owed to us, representing a clawback of previously paid incentive allocations, which would have no income statement impact as it was previously accrued.
As of December 31, 2020, we expect to fund additional capital to certain of our partially owned entities aggregating approximately $10,700,000.
As of December 31, 2020, we have construction commitments aggregating approximately $451,000,000.
54


Liquidity and Capital Resources - continued
Cash Flows for the Year Ended December 31, 2020 Compared to December 31, 2019
Our cash flow activities for the years ended December 31, 2020 and 2019 are summarized as follows:
(Amounts in thousands)For the Year Ended December 31,(Decrease) Increase in Cash Flow
 20202019
Net cash provided by operating activities$424,240 $662,539 $(238,299)
Net cash (used in) provided by investing activities(87,800)2,463,276 (2,551,076)
Net cash used in financing activities(213,202)(2,235,589)2,022,387 
Cash and cash equivalents and restricted cash was $1,730,369,000 at December 31, 2020, a $123,238,000 increase from the balance at December 31, 2019.
Net cash provided by operating activities of $424,240,000 for the year ended December 31, 2020 was comprised of $615,721,000 of cash from operations, including distributions of income from partially owned entities of $175,246,000, and a net decrease of $191,481,000 in cash due to the timing of cash receipts and payments related to changes in operating assets and liabilities.
The following table details the net cash (used in) provided by investing activities for the years ended December 31, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,(Decrease) Increase in Cash Flow
20202019
Proceeds from sale of condominium units at 220 Central Park South$1,044,260 $1,605,356 $(561,096)
Development costs and construction in progress(601,920)(649,056)47,136 
Moynihan Train Hall expenditures(395,051)(438,935)43,884 
Additions to real estate(155,738)(233,666)77,928 
Proceeds from sales of marketable securities28,375 168,314 (139,939)
Investments in partially owned entities(8,959)(18,257)9,298 
Distributions of capital from partially owned entities2,389 24,880 (22,491)
Acquisitions of real estate and other(1,156)(69,699)68,543 
Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of transaction costs and $10,899 of deconsolidated cash and restricted cash)— 1,248,743 (1,248,743)
Proceeds from redemption of 640 Fifth Avenue preferred equity— 500,000 (500,000)
Proceeds from sale of real estate and related investments— 324,201 (324,201)
Proceeds from repayments of loans receivable— 1,395 (1,395)
Net cash (used in) provided by investing activities$(87,800)$2,463,276 $(2,551,076)

The following table details the net cash used in financing activities for the years ended December 31, 2020 and 2019:
(Amounts in thousands)For the Year Ended December 31,Increase (Decrease) in Cash Flow
20202019
Repayments of borrowings$(1,067,564)$(2,718,987)$1,651,423 
Proceeds from borrowings1,056,315 1,108,156 (51,841)
Dividends paid on common shares/Distributions to Vornado(827,319)(503,785)(323,534)
Moynihan Train Hall reimbursement from Empire State Development395,051 438,935 (43,884)
Proceeds from issuance of preferred shares/units291,182 — 291,182 
Contributions from noncontrolling interests in consolidated subsidiaries100,094 17,871 82,223 
Distributions to redeemable security holders and noncontrolling interests in consolidated subsidiaries(91,514)(80,194)(11,320)
Dividends paid on preferred shares/Distributions to preferred unitholders(64,271)(50,131)(14,140)
Debt issuance costs(10,901)(15,588)4,687 
Proceeds received from exercise of Vornado stock options and other5,862 6,903 (1,041)
Repurchase of shares/Class A units related to stock compensation agreements and related tax withholdings and other(137)(8,692)8,555 
Purchase of marketable securities in connection with defeasance of mortgage payable— (407,126)407,126 
Prepayment penalty on redemption of senior unsecured notes due 2022— (22,058)22,058 
Redemption of preferred shares/units— (893)893 
Net cash used in financing activities$(213,202)$(2,235,589)$2,022,387 
55


Liquidity and Capital Resources - continued
Capital Expenditures for the Year Ended December 31, 2020
Capital expenditures consist of expenditures to maintain assets, tenant improvement allowances and leasing commissions. Recurring capital expenditures include expenditures to maintain a property’s competitive position within 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, as well as tenant improvements and leasing commissions for space that was vacant at the time of acquisition of a property.
Below is a summary of amounts paid for capital expenditures and leasing commissions for the year ended December 31, 2020.
(Amounts in thousands)TotalNew YorktheMART555 California Street
Expenditures to maintain assets$65,173 $53,543 $7,627 $4,003 
Tenant improvements65,313 52,763 5,859 6,691 
Leasing commissions18,626 14,612 3,173 841 
Recurring tenant improvements, leasing commissions and other capital expenditures149,112 120,918 16,659 11,535 
Non-recurring capital expenditures64,624 64,414 210 — 
Total capital expenditures and leasing commissions$213,736 $185,332 $16,869 $11,535 
Development and Redevelopment Expenditures for the Year Ended December 31, 2020 
Development and redevelopment expenditures consist of all hard and soft costs associated with the development or redevelopment of a property, including capitalized interest, debt and operating costs until the property is substantially completed and ready for its intended use. Our development project estimates below include initial leasing costs, which are reflected as non-recurring capital expenditures in the table above. 
Below is a summary of amounts paid for development and redevelopment expenditures in the year ended December 31, 2020. These expenditures include interest and debt expense of $41,056,000, payroll of $17,654,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $129,097,000, which were capitalized in connection with the development and redevelopment of these projects.
(Amounts in thousands)TotalNew YorktheMART555 California StreetOther
Farley Office and Retail$239,427 $239,427 $— $— $— 
220 CPS119,763 — — — 119,763 
PENN1105,392 105,392 — — — 
PENN276,883 76,883 — — — 
345 Montgomery Street16,661 — — 16,661 — 
Other43,794 39,746 4,011 — 37 
601,920 461,448 4,011 16,661 119,800 

Capital Expenditures for the Year Ended December 31, 2019 
Below is a summary of amounts paid for capital expenditures and leasing commissions for the year ended December 31, 2019.
(Amounts in thousands)TotalNew YorktheMART555 California Street
Expenditures to maintain assets$93,226 $80,416 $9,566 $3,244 
Tenant improvements98,261 84,870 9,244 4,147 
Leasing commissions18,229 16,316 827 1,086 
Recurring tenant improvements, leasing commissions and other capital expenditures209,716 181,602 19,637 8,477 
Non-recurring capital expenditures30,374 28,269 332 1,773 
Total capital expenditures and leasing commissions$240,090 $209,871 $19,969 $10,250 
56


Liquidity and Capital Resources - continued
Development and Redevelopment Expenditures for the Year Ended December 31, 2019
Below is a summary of amounts paid for development and redevelopment expenditures in the year ended December 31, 2019. These expenditures include interest and debt expense of $72,200,000, payroll of $16,014,000, and other soft costs (primarily architectural and engineering fees, permits, real estate taxes and professional fees) aggregating $83,463,000, which were capitalized in connection with the development and redevelopment of these projects. 
(Amounts in thousands)TotalNew YorktheMART555 California StreetOther
Farley Office and Retail$265,455 $265,455 $— $— $— 
220 CPS181,177 — — — 181,177 
PENN151,168 51,168 — — — 
345 Montgomery Street29,441 — — 29,441 — 
PENN228,719 28,719 — — — 
606 Broadway7,434 7,434 — — — 
1535 Broadway1,031 1,031 — — — 
Other84,631 78,128 2,322 3,896 285 
 $649,056 $431,935 $2,322 $33,337 $181,462 

Funds From Operations
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 depreciable real estate assets, real estate impairment losses, depreciation and amortization expense from real estate assets and other specified 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. 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 19 – (Loss) Income Per Share/(Loss) Income Per Class A Unit, in our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
57


FFO - continued
Vornado Realty Trust - continued
FFO attributable to common shareholders plus assumed conversions was $750,522,000, or $3.93 per diluted share, for the year ended December 31, 2020, compared to $1,003,398,000, or $5.25 per diluted share, for the prior year. Details of certain items that impact FFO are discussed in the financial results summary of our “Overview.”
(Amounts in thousands, except per share amounts)For the Year Ended December 31,
 20202019
Reconciliation of our net (loss) income attributable to common shareholders to FFO attributable to common shareholders plus assumed conversions:  
Net (loss) income attributable to common shareholders$(348,744)$3,097,806 
Per diluted share$(1.83)$16.21 
FFO adjustments:
Depreciation and amortization of real property$368,556 $389,024 
Real estate impairment losses236,286 32,001 
Net gain on transfer to Fifth Avenue and Times Square JV on April 18, 2019, net of $11,945 attributable to noncontrolling interests— (2,559,154)
Net gains on sale of real estate— (178,711)
Net gain from sale of UE common shares (sold on March 4, 2019)— (62,395)
Decrease (increase) in fair value of marketable securities:
PREIT (accounted for as a marketable security from March 12, 2019 and sold on January 23, 2020)4,938 21,649 
Lexington (sold on March 1, 2019)— (16,068)
Other— (48)
Proportionate share of adjustments to equity in net income of partially owned entities to arrive at FFO:
Non-cash impairment loss on our investment in Fifth Avenue and Times Square JV, net of $4,289 of noncontrolling interests409,060 — 
Depreciation and amortization of real property156,646 134,706 
Decrease in fair value of marketable securities2,801 2,852 
1,178,287 (2,236,144)
Noncontrolling interests' share of above adjustments(79,068)141,679 
FFO adjustments, net$1,099,219 $(2,094,465)
FFO attributable to common shareholders$750,475 $1,003,341 
Convertible preferred share dividends47 57 
FFO attributable to common shareholders plus assumed conversions$750,522 $1,003,398 
Per diluted share$3.93 $5.25 
Reconciliation of weighted average shares outstanding:  
Weighted average common shares outstanding191,146 190,801 
Effect of dilutive securities:
Convertible preferred shares28 34 
Employee stock options and restricted share awards19 216 
Denominator for FFO per diluted share191,193 191,051 
58


ITEM 7A.     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 unit amounts)20202019
December 31, BalanceWeighted
Average
Interest Rate
Effect of 1%
Change In
Base Rates
December 31, BalanceWeighted
Average
Interest Rate
Consolidated debt:     
Variable rate$3,220,815 1.83%$32,208 $1,643,500 3.09%
Fixed rate4,212,643 3.70%— 5,801,516 3.57%
 $7,433,458 2.89%32,208 $7,445,016 3.46%
Pro rata share of debt of non-consolidated entities(1):
     
Variable rate$1,384,710 1.80%13,847 $1,441,690 3.34%
Fixed rate1,488,464 3.76%— 1,361,169 3.93%
 $2,873,174 2.81%13,847 $2,802,859 3.62%
Noncontrolling interests’ share of consolidated subsidiaries  (371)  
Total change in annual net income attributable to the Operating Partnership  45,684   
Noncontrolling interests’ share of the Operating Partnership  (3,070)  
Total change in annual net income attributable to Vornado  $42,614   
Total change in annual net income attributable to the Operating Partnership per diluted Class A unit  $0.22   
Total change in annual net income attributable to Vornado per diluted share  $0.22   
_______________________
(1)    Our pro rata share of debt of non-consolidated entities as of December 31, 2020 and 2019 is net of $16,200 and $63,409, respectively, of our share of Alexander's participation in its Rego Park II shopping center mortgage loan which is considered partially extinguished as the participation interest is a reacquisition of debt.
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 derivative instruments, all of which hedge variable rate debt, as of December 31, 2020.
(Amounts in thousands)As of December 31, 2020
Variable Rate
Hedged ItemFair ValueNotional AmountSpread over LIBORInterest RateSwapped RateExpiration Date
Interest rate caps (included in other assets):
Various$17 $175,000 
Interest rate swaps (included in other liabilities):
Unsecured term loan$57,723 $750,000 L+1001.15%3.87%10/23
33-00 Northern Boulevard mortgage loan8,310 100,000 L+1801.95%4.14%1/25
$66,033 $850,000 
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 December 31, 2020, the estimated fair value of our consolidated debt was $7,463,000,000.
59


ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEX TO FINANCIAL STATEMENTS

 
 Page
Number
Vornado Realty Trust 
  
Consolidated Balance Sheets at December 31, 2020 and 2019
 
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018
  
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
 
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018
 
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
 Vornado Realty L.P. 
  
Consolidated Balance Sheets at December 31, 2020 and 2019
  
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018
  
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
  
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018
  
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Vornado Realty Trust and Vornado Realty L.P. 

60


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vornado Realty Trust and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with the accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


61


Impairment Losses — Refer to Notes 3, 7, 14, and 16 to the financial statements
Critical Audit Matter Description
The Company’s wholly owned properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the property’s carrying amount over its fair value. Fair value is determined based on estimated cash flow projections that utilize discount and capitalization rates and available market information. The Company’s discounted cash flows requires management to make significant estimates and assumptions related to future market rental rates, capitalization rates, and discount rates. The Company recognized impairment losses on its wholly owned properties of $236,286,000 for the year ended December 31, 2020 which are included in “Impairment losses and transaction related costs, net” within the consolidated statements of income.
The Company also reviews its investments in partially owned entities for impairment when indications of potential impairment exists. An impairment loss for investments in partially owned entities is recorded when there is a decline in the fair value below the carrying value that is other than temporary. Fair value is determined based on discounted cash flows which requires management to make significant estimates and assumptions related to future market rental rates, capitalization rates, and discount rates. The Company performed an impairment analysis on its investment in Fifth Avenue and Times Square JV and determined the decline in value is other than temporary and therefore recognized impairment losses on its investment in Fifth Avenue and Times Square JV of $413,349,000 for the year ended December 31, 2020 which are included in “(Loss) income from partially owned entities” within the consolidated statements of income.
We identified the impairment of wholly owned properties and the investment in Fifth Avenue and Times Square JV as a critical audit matter because of the significant estimates and assumptions management makes to determine the fair value of wholly owned properties and investments in partially owned entities, specifically the estimates of market rental rates, capitalization rates, and discount rates used in the discounted cash flows. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discounted cash flow analyses included, among other things, the following:
We tested the effectiveness of controls over management’s evaluation of impairment of its wholly owned assets and investments in partially owned entities and measurement of that impairment based on discounted cash flows, including those over the market rental rates, capitalization rates, and discount rates used in the assessment.
With the assistance of our fair value specialists, we evaluated the reasonableness of significant assumptions in the discounted cash flows analyses, including identifying independent estimates of market rental rates, capitalization rates, and discount rates, focusing on geographical location and property. In addition, we tested the mathematical accuracy of the discounted cash flows analyses.
We evaluated the reasonableness of management’s discounted cash flows analyses by comparing management’s projections to the Company’s historical results and external market sources.
We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit.


/s/ DELOITTE & TOUCHE LLP

New York, New York
February 16, 2021

We have served as the Company’s auditor since 1976.
62

VORNADO REALTY TRUST
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except unit, share and per share amounts)As of December 31,
20202019
ASSETS  
Real estate, at cost:
Land$2,420,054 $2,591,261 
Buildings and improvements7,933,030 7,953,163 
Development costs and construction in progress1,604,637 1,490,614 
Moynihan Train Hall development expenditures914,960 
Leasehold improvements and equipment130,222 124,014 
Total12,087,943 13,074,012 
Less accumulated depreciation and amortization(3,169,446)(3,015,958)
Real estate, net8,918,497 10,058,054 
Right-of-use assets367,365 379,546 
Cash and cash equivalents1,624,482 1,515,012 
Restricted cash105,887 92,119 
Marketable securities33,313 
Tenant and other receivables77,658 95,733 
Investments in partially owned entities3,491,107 3,999,165 
Real estate fund investments3,739 222,649 
220 Central Park South condominium units ready for sale128,215 408,918 
Receivable arising from the straight-lining of rents674,075 742,206 
Deferred leasing costs, net of accumulated amortization of $196,972 and $196,229372,919 353,986 
Identified intangible assets, net of accumulated amortization of $93,113 and $98,58723,856 30,965 
Other assets434,022 355,347 
 $16,221,822 $18,287,013 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Mortgages payable, net$5,580,549 $5,639,897 
Senior unsecured notes, net446,685 445,872 
Unsecured term loan, net796,762 745,840 
Unsecured revolving credit facilities575,000 575,000 
Lease liabilities401,008 498,254 
Moynihan Train Hall obligation914,960 
Special dividend/distribution payable398,292 
Accounts payable and accrued expenses427,202 440,049 
Deferred revenue40,110 59,429 
Deferred compensation plan105,564 103,773 
Other liabilities294,520 265,754 
Total liabilities8,667,400 10,087,120 
Commitments and contingencies00
Redeemable noncontrolling interests:
Class A units - 13,583,607 and 13,298,956 units outstanding507,212 884,380 
Series D cumulative redeemable preferred units - 141,401 units outstanding4,535 4,535 
Total redeemable noncontrolling partnership units511,747 888,915 
Redeemable noncontrolling interest in a consolidated subsidiary94,520 
Total redeemable noncontrolling interests606,267 888,915 
Shareholders' equity:
Preferred shares of beneficial interest: 0 par value per share; authorized 110,000,000 shares; issued and outstanding 48,793,402 and 36,795,640 shares1,182,339 891,214 
Common shares of beneficial interest: $0.04 par value per share; authorized 250,000,000 shares; issued and outstanding 191,354,679 and 190,985,677 shares7,633 7,618 
Additional capital8,192,507 7,827,697 
Earnings less than distributions(2,774,182)(1,954,266)
Accumulated other comprehensive loss(75,099)(40,233)
Total shareholders' equity6,533,198 6,732,030 
Noncontrolling interests in consolidated subsidiaries414,957 578,948 
Total equity6,948,155 7,310,978 
 $16,221,822 $18,287,013 
See notes to the consolidated financial statements.
63

VORNADO REALTY TRUST 
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)For the Year Ended December 31,
 202020192018
REVENUES:   
Rental revenues$1,377,635 $1,767,222 $2,007,333 
Fee and other income150,316 157,478 156,387 
Total revenues1,527,951 1,924,700 2,163,720 
EXPENSES:
Operating(789,066)(917,981)(963,478)
Depreciation and amortization(399,695)(419,107)(446,570)
General and administrative(181,509)(169,920)(141,871)
(Expense) benefit from deferred compensation plan liability(6,443)(11,609)2,480 
Impairment losses and transaction related costs, net(174,027)(106,538)(31,320)
Total expenses(1,550,740)(1,625,155)(1,580,759)
(Loss) income from partially owned entities(329,112)78,865 9,149 
Loss from real estate fund investments(226,327)(104,082)(89,231)
Interest and other investment (loss) income, net(5,499)21,819 17,057 
Income (loss) from deferred compensation plan assets6,443 11,609 (2,480)
Interest and debt expense(229,251)(286,623)(347,949)
Net gain on transfer to Fifth Avenue and Times Square JV2,571,099 
Purchase price fair value adjustment44,060 
Net gains on disposition of wholly owned and partially owned assets381,320 845,499 246,031 
(Loss) income before income taxes(425,215)3,437,731 459,598 
Income tax expense(36,630)(103,439)(37,633)
(Loss) income from continuing operations(461,845)3,334,292 421,965 
(Loss) income from discontinued operations(30)638 
Net (loss) income(461,845)3,334,262 422,603 
Less net loss (income) attributable to noncontrolling interests in:
Consolidated subsidiaries139,894 24,547 53,023 
Operating Partnership24,946 (210,872)(25,672)
Net (loss) income attributable to Vornado(297,005)3,147,937 449,954 
Preferred share dividends(51,739)(50,131)(50,636)
Preferred share issuance costs(14,486)
NET (LOSS) INCOME attributable to common shareholders$(348,744)$3,097,806 $384,832 
(LOSS) INCOME PER COMMON SHARE - BASIC:   
Net (loss) income per common share$(1.83)$16.23 $2.02 
Weighted average shares outstanding191,146 190,801 190,219 
(LOSS) INCOME PER COMMON SHARE - DILUTED:   
Net (loss) income per common share$(1.83)$16.21 $2.01 
Weighted average shares outstanding191,146 191,053 191,290 

See notes to consolidated financial statements.
64

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)For the Year Ended December 31,
 202020192018
Net (loss) income$(461,845)$3,334,262 $422,603 
Other comprehensive (loss) income:
Reduction in value of interest rate swaps and other(29,971)(47,883)(14,635)
Other comprehensive (loss) income of nonconsolidated subsidiaries(14,342)(938)1,155 
Amounts reclassified from accumulated other comprehensive loss relating to
nonconsolidated subsidiary
(2,311)
Comprehensive (loss) income(506,158)3,283,130 409,123 
Less comprehensive loss (income) attributable to noncontrolling interests174,287 (183,090)28,187 
Comprehensive (loss) income attributable to Vornado$(331,871)$3,100,040 $437,310 

See notes to consolidated financial statements.
65

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands, except per share amount)Common SharesAdditional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Preferred Shares
SharesAmountSharesAmount
Balance as of December 31, 201936,796 $891,214 190,986 $7,618 $7,827,697 $(1,954,266)$(40,233)$578,948 $7,310,978 
Cumulative effect of accounting change (see Note 3)— — — — — (16,064)— — (16,064)
Net loss attributable to
Vornado
— — — — — (297,005)— — (297,005)
Net loss attributable to
nonredeemable noncontrolling
interests in consolidated
subsidiaries
— — — — — — — (140,438)(140,438)
Dividends on common shares ($2.38 per share)— — — — — (454,939)— — (454,939)
Dividends on preferred shares (see Note 12 for dividends per share amounts)— — — — — (51,739)— — (51,739)
Series N cumulative redeemable preferred shares issuance12,000 291,182 — — — — — — 291,182 
Common shares issued:
Upon redemption of Class A units, at redemption value— — 236 9,257 — — — 9,266 
Under employees' share option plan— — 69 3,514 — — — 3,517 
Under dividend reinvestment plan— — 47 2,343 — — — 2,345 
Contributions:
Real estate fund investments— — — — — — — 3,389 3,389 
Other— — — — — — — 4,305 4,305 
Distributions— — — — — — — (33,007)(33,007)
Conversion of Series A preferred shares to common shares(3)(57)57 — — — 
Deferred compensation shares and options— — 13 1,305 (137)— — 1,169 
Other comprehensive loss of
nonconsolidated subsidiaries
— — — — — — (14,342)— (14,342)
Reduction in value of interest rate swaps— — — — — — (29,972)— (29,972)
Unearned 2017 Out-Performance Plan awards acceleration— — — — 10,824 — — — 10,824 
Redeemable Class A unit measurement adjustment— — — — 344,043 — — — 344,043 
Redeemable noncontrolling interests' share of above adjustments— — — — — — 2,914 — 2,914 
Other— — — — (6,533)(32)6,534 1,760 1,729 
Balance as of December 31, 202048,793 $1,182,339 191,355 $7,633 $8,192,507 $(2,774,182)$(75,099)$414,957 $6,948,155 

See notes to consolidated financial statements.
66

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(Amounts in thousands, except per share amounts)Common SharesAdditional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Preferred Shares
SharesAmountSharesAmount
Balance as of December 31, 201836,800 $891,294 190,535 $7,600 $7,725,857 $(4,167,184)$7,664 $642,652 $5,107,883 
Net income attributable to Vornado— — — — — 3,147,937 — — 3,147,937 
Net loss attributable to noncontrolling interests in consolidated subsidiaries— — — — — — — (24,547)(24,547)
Dividends on common shares:
     Special dividend ($1.95 per
       share)
— — — — — (372,380)— — (372,380)
     Aggregate quarterly dividends
      ($2.64 per common share)
— — — — — (503,785)— — (503,785)
Dividends on preferred shares— — — — — (50,131)— — (50,131)
Common shares issued:
Upon redemption of Class A units, at redemption value— — 171 11,243 — — — 11,250 
Under employees' share option plan— — 245 10 5,479 (8,587)— — (3,098)
Under dividend reinvestment plan— — 22 1,413 — — — 1,414 
Contributions:
Real estate fund investments— — — — — — — 9,023 9,023 
Other— — — — — — — 8,848 8,848 
Distributions— — — — — — — (45,587)(45,587)
Conversion of Series A preferred shares to common shares(2)(80)— 80 — — — 
Deferred compensation shares and options— — — 1,095 (105)— — 990 
Amounts reclassified related to a nonconsolidated subsidiary— — — — — — (2,311)— (2,311)
Other comprehensive loss of nonconsolidated subsidiaries— — — — — — (938)— (938)
Reduction in value of interest rate swaps— — — — — — (47,885)— (47,885)
Unearned 2016 Out-Performance Plan awards acceleration— — — — 11,720 — — — 11,720 
Redeemable Class A unit measurement adjustment— — — — 70,810 — — — 70,810 
Redeemable noncontrolling interests' share of above adjustments— — — — — — 3,235 — 3,235 
Deconsolidation of partially owned entity— — — — — — — (11,441)(11,441)
Other(2)— — — — (31)— (29)
Balance as of December 31, 201936,796 $891,214 190,986 $7,618 $7,827,697 $(1,954,266)$(40,233)$578,948 $7,310,978 

See notes to consolidated financial statements.
67

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED

(Amounts in thousands, except per share amount)Common SharesAdditional
Capital
Earnings
Less Than
Distributions
Accumulated
Other
Comprehensive
Income
Non-
controlling
Interests in
Consolidated
Subsidiaries
Total
Equity
Preferred Shares
SharesAmountSharesAmount
Balance as of December 31, 201736,800 $891,988 189,984 $7,577 $7,492,658 $(4,183,253)$128,682 $670,049 $5,007,701 
Cumulative effect of accounting change— — — — — 122,893 (108,374)— 14,519 
Net income attributable to Vornado— — — — — 449,954 — — 449,954 
Net loss attributable to noncontrolling interests in consolidated subsidiaries— — — — — — — (53,023)(53,023)
Dividends on common shares ($2.52 per share)— — — — — (479,348)— — (479,348)
Dividends on preferred shares— — — — — (50,636)— — (50,636)
Series G and Series I cumulative redeemable preferred shares issuance costs— (663)— — — (14,486)— — (15,149)
Common shares issued:
Upon redemption of Class A units, at redemption value— — 244 10 17,058 — — — 17,068 
Under employees' share option plan— — 279 12 5,907 (12,185)— — (6,266)
Under dividend reinvestment plan— — 20 1,389 — — — 1,390 
Contributions:00
Real estate fund investments— — — — — — — 46,942 46,942 
Other— — — — — — — 15,715 15,715 
Distributions:
Real estate fund investments— — — — — — — (12,665)(12,665)
Other— — — — — — — (33,250)(33,250)
Conversion of Series A preferred shares to common shares— (31)— 30 — — — (1)
Deferred compensation shares and options— — — 1,157 (121)— — 1,036 
Unearned 2015 Out-Performance Plan awards acceleration— — — — 9,046 — — — 9,046 
Other comprehensive income of nonconsolidated subsidiaries— — — — — — 1,155 — 1,155 
Reduction in value of interest rate swaps— — — — — — (14,634)— (14,634)
Redeemable Class A unit measurement adjustment— — — — 198,064 — — — 198,064 
Redeemable noncontrolling interests' share of above adjustments— — — — — — 836 — 836 
Consolidation of the Farley joint venture— — — — — — — 8,720 8,720 
Other— — — — 548 (2)(1)164 709 
Balance as of December 31, 201836,800 $891,294 190,535 $7,600 $7,725,857 $(4,167,184)$7,664 $642,652 $5,107,883 

See notes to consolidated financial statements.

68

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)For the Year Ended December 31,
 202020192018
Cash Flows from Operating Activities:
Net (loss) income$(461,845)$3,334,262 $422,603 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)417,942 438,933 472,785 
Net gains on disposition of wholly owned and partially owned assets(381,320)(845,499)(246,031)
Equity in net loss (income) of partially owned entities329,112 (78,865)(9,149)
Real estate impairment losses and related write-offs236,286 26,705 12,000 
Net unrealized loss on real estate fund investments226,107 106,109 84,706 
Distributions of income from partially owned entities175,246 116,826 78,831 
Non-cash (gain on extinguishment of 608 Fifth Avenue lease liability) impairment loss on 608 Fifth Avenue right-of-use asset(70,260)75,220 
Write-off of lease receivables deemed uncollectible63,204 17,237 
Stock-based compensation expense48,677 53,908 31,722 
Straight-lining of rents24,404 9,679 (7,605)
Amortization of below-market leases, net(16,878)(19,830)(38,573)
Credit losses on loans receivable13,369 
Decrease in fair value of marketable securities4,938 5,533 26,453 
Net gain on transfer to Fifth Avenue and Times Square JV(2,571,099)
Prepayment penalty on redemption of senior unsecured notes due 202222,058 
Purchase price fair value adjustment(44,060)
Return of capital from real estate fund investments20,290 
Change in valuation of deferred tax assets and liabilities12,835 
Other non-cash adjustments6,739 (3,472)7,499 
Changes in operating assets and liabilities:
Real estate fund investments(7,197)(10,000)(68,950)
Tenant and other receivables, net(5,330)(25,988)(14,532)
Prepaid assets(137,452)7,558 151,533 
Other assets(52,832)(4,302)(84,222)
Accounts payable and accrued expenses14,868 5,940 5,869 
Other liabilities(3,538)1,626 (11,363)
Net cash provided by operating activities424,240 662,539 802,641 
Cash Flows from Investing Activities:
Proceeds from sale of condominium units at 220 Central Park South1,044,260 1,605,356 214,776 
Development costs and construction in progress(601,920)(649,056)(418,186)
Moynihan Train Hall expenditures(395,051)(438,935)(74,609)
Additions to real estate(155,738)(233,666)(234,602)
Proceeds from sales of marketable securities28,375 168,314 4,101 
Investments in partially owned entities(8,959)(18,257)(37,131)
Distributions of capital from partially owned entities2,389 24,880 100,178 
Acquisitions of real estate and other(1,156)(69,699)(574,812)
Proceeds from transfer of interest in Fifth Avenue and Times Square JV (net of $35,562 of transaction costs and $10,899 of deconsolidated cash and restricted cash)1,248,743 
Proceeds from redemption of 640 Fifth Avenue preferred equity500,000 
Proceeds from sale of real estate and related investments324,201 219,731 
Proceeds from repayments of loans receivable— 1,395 25,757 
Investments in loans receivable(105,000)
Net consolidation of Farley Office and Retail Building2,075 
Net cash (used in) provided by investing activities(87,800)2,463,276 (877,722)

See notes to consolidated financial statements.

69

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

(Amounts in thousands)For the Year Ended December 31,
 202020192018
Cash Flows from Financing Activities:
Repayments of borrowings$(1,067,564)$(2,718,987)$(685,265)
Proceeds from borrowings1,056,315 1,108,156 526,766 
Dividends paid on common shares(827,319)(503,785)(479,348)
Moynihan Train Hall reimbursement from Empire State Development395,051 438,935 74,609 
Proceeds from issuance of preferred shares291,182 
Contributions from noncontrolling interests100,094 17,871 61,062 
Distributions to noncontrolling interests(91,514)(80,194)(76,149)
Dividends paid on preferred shares(64,271)(50,131)(55,115)
Debt issuance costs(10,901)(15,588)(12,908)
Proceeds received from exercise of employee share options and other5,862 6,903 7,309 
Repurchase of shares related to stock compensation agreements and related tax withholdings and other(137)(8,692)(12,969)
Purchase of marketable securities in connection with defeasance of mortgage payable(407,126)
Prepayment penalty on redemption of senior unsecured notes due 2022(22,058)
Redemption of preferred shares(893)(470,000)
Debt prepayment and extinguishment costs(818)
Net cash used in financing activities(213,202)(2,235,589)(1,122,826)
Net increase (decrease) in cash and cash equivalents and restricted cash123,238 890,226 (1,197,907)
Cash and cash equivalents and restricted cash at beginning of period1,607,131 716,905 1,914,812 
Cash and cash equivalents and restricted cash at end of period$1,730,369 $1,607,131 $716,905 
Reconciliation of Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents at beginning of period$1,515,012 $570,916 $1,817,655 
Restricted cash at beginning of period92,119 145,989 97,157 
Cash and cash equivalents and restricted cash at beginning of period$1,607,131 $716,905 $1,914,812 
Cash and cash equivalents at end of period$1,624,482 $1,515,012 $570,916 
Restricted cash at end of period105,887 92,119 145,989 
Cash and cash equivalents and restricted cash at end of period$1,730,369 $1,607,131 $716,905 

See notes to consolidated financial statements.
70

VORNADO REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

(Amounts in thousands)For the Year Ended December 31,
 202020192018
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest, excluding capitalized interest of $40,855, $67,980 and $67,402$210,052 $283,613 $311,835 
Cash payments for income taxes$15,105 $59,834 $62,225 
Non-Cash Investing and Financing Activities:
Decrease in assets and liabilities resulting from the deconsolidation of Moynihan Train Hall:
Real estate, net$(1,291,804)$$
Moynihan Train Hall obligation(1,291,804)
Reclassification of condominium units from "development costs and construction in progress" to
"220 Central Park South condominium units ready for sale"
388,280 1,311,468 233,179 
Redeemable Class A unit measurement adjustment344,043 70,810 198,064 
Write-off of fully depreciated assets(189,250)(122,813)(86,064)
Accrued capital expenditures included in accounts payable and accrued expenses117,641 109,975 88,115 
Investments received in exchange for transfer to Fifth Avenue and Times Square JV:
Preferred equity2,327,750 
Common equity1,449,495 
Lease liabilities arising from the recognition of right-of-use assets526,866 
Marketable securities transferred in connection with the defeasance of mortgage payable(407,126)
Special dividend/distribution declared and payable on January 15, 2020398,292 
Defeasance of mortgage payable390,000 
Recognition of negative basis related to the sale of our investment in 330 Madison Avenue60,052 
Amounts related to our investment in Pennsylvania Real Estate Investment Trust reclassified from "investments in partially owned entities" and "accumulated other comprehensive loss" to "marketable securities" upon conversion of operating partnership units to common shares54,962 
Increase in assets and liabilities resulting from the consolidation of Farley Office and Retail Building:
Real estate, net401,708 
Mortgage payable, net249,459 
Increase in assets and liabilities resulting from the consolidation of Moynihan Train Hall:
Real estate, net346,926 
Moynihan Train Hall obligation346,926 

See notes to consolidated financial statements.
71


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Partners
Vornado Realty L.P.
New York, New York
 
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vornado Realty L.P. and subsidiaries (the "Partnership") as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with the accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2021, expressed an unqualified opinion on the Partnership's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the Partnership's financial statements based on our audits. 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 US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


72


Impairment Losses — Refer to Notes 3, 7, 14, and 16 to the financial statements
Critical Audit Matter Description
The Partnership’s wholly owned properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is measured based on the excess of the property’s carrying amount over its fair value. Fair value is determined based on estimated cash flow projections that utilize discount and capitalization rates and available market information. The Partnership’s discounted cash flows requires management to make significant estimates and assumptions related to future market rental rates, capitalization rates, and discount rates. The Partnership recognized impairment losses on its wholly owned properties of $236,286,000 for the year ended December 31, 2020 which are included in “Impairment losses and transaction related costs, net” within the consolidated statements of income.
The Partnership also reviews its investments in partially owned entities for impairment when indications of potential impairment exists. An impairment loss for investments in partially owned entities is recorded when there is a decline in the fair value below the carrying value that is other than temporary. Fair value is determined based on discounted cash flows which requires management to make significant estimates and assumptions related to future market rental rates, capitalization rates, and discount rates. The Partnership performed an impairment analysis on its investment in Fifth Avenue and Times Square JV and determined the decline in value is other than temporary and therefore recognized impairment losses on its investment in Fifth Avenue and Times Square JV of $413,349,000 for the year ended December 31, 2020 which are included in “(Loss) income from partially owned entities” within the consolidated statements of income.
We identified the impairment of wholly owned properties and the investment in Fifth Avenue and Times Square JV as a critical audit matter because of the significant estimates and assumptions management makes to determine the fair value of wholly owned properties and investments in partially owned entities, specifically the estimates of market rental rates, capitalization rates, and discount rates used in the discounted cash flows. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discounted cash flow analyses included, among other things, the following:
We tested the effectiveness of controls over management’s evaluation of impairment of its wholly owned assets and investments in partially owned entities and measurement of that impairment based on discounted cash flows, including those over the market rental rates, capitalization rates, and discount rates used in the assessment.
With the assistance of our fair value specialists, we evaluated the reasonableness of significant assumptions in the discounted cash flows analyses, including identifying independent estimates of market rental rates, capitalization rates, and discount rates, focusing on geographical location and property. In addition, we tested the mathematical accuracy of the discounted cash flows analyses.
We evaluated the reasonableness of management’s discounted cash flows analyses by comparing management’s projections to the Partnership’s historical results and external market sources.
We evaluated whether the assumptions were consistent with evidence obtained in other areas of the audit.

/s/ DELOITTE & TOUCHE LLP

New York, New York
February 16, 2021

We have served as the Partnership’s auditor since 1997.
73

VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except unit amounts)As of December 31,
20202019
ASSETS  
Real estate, at cost:
Land$2,420,054 $2,591,261 
Buildings and improvements7,933,030 7,953,163 
Development costs and construction in progress1,604,637 1,490,614 
Moynihan Train Hall development expenditures914,960 
Leasehold improvements and equipment130,222 124,014 
Total12,087,943 13,074,012 
Less accumulated depreciation and amortization(3,169,446)(3,015,958)
Real estate, net8,918,497 10,058,054 
Right-of-use assets367,365 379,546 
Cash and cash equivalents1,624,482 1,515,012 
Restricted cash105,887 92,119 
Marketable securities33,313 
Tenant and other receivables77,658 95,733 
Investments in partially owned entities3,491,107 3,999,165 
Real estate fund investments3,739 222,649 
220 Central Park South condominium units ready for sale128,215 408,918 
Receivable arising from the straight-lining of rents674,075 742,206 
Deferred leasing costs, net of accumulated amortization of $196,972 and $196,229372,919 353,986 
Identified intangible assets, net of accumulated amortization of $93,113 and $98,58723,856 30,965 
Other assets434,022 355,347 
 $16,221,822 $18,287,013 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
M