Vornado Retail Portfolio Spinoff

Vornado Retail Por.olio Acquisi4on Jonathan Smith

EXECUTIVE SU

MMARY

INVESTMENT SUMMARY

Fiscal Year Ending ($MM) 2012 2011 2010

Fiscal year 2003 Property Rentals $276.1 $274.3 $256.6

Total Revenue 393.9 398.2 378.6 OperaGng Income 48.3 161.5 67.4

Plus: DepreciaGon Expense 76.8 77.4 71.5

Minus: General & AdministraGve 23.6 25.4 27.6

Net Opera4ng Income 252 265 238

Income from P.O. EnGGes $1.4 $2.7 $8.2

Interest & Investment Income 0.027 (0.032) 0.164

Net Gain on DisposiGon of Assets 8.4 4.2 0

Income from ConGnuing Ops (4.5) 97.5 118.1

Income from DisconGnuing Ops 42.9 31.8 19

Net Income 38.3 129.2 137.1

Plus: Consolidated Subsidiaries $1.8 $0.237 $(0.778)

Net Income to Vornado 40.1 129.5 136.3 Plus: Interest & Debt Expense 73.828 82.6 79.5

Plus Dep. & AmorGzaGon 86.5 91 86.6

Plus: Income Tax Expense 0.0 0.034 0.037

EBITDA 200.5 303.2 302.5

INVESTMENT TARGET

INVESTMENT MAKE-‐UP

RETURNS SUMMARY

[CATEGORY NAME]

[PERCENTAGE]

[CATEGORY NAME]

[PERCENTAGE]

[CATEGORY NAME]

[PERCENTAGE]

SHOPPING CENTERS REGIONAL MALLS OTHER

VORNADO U.S. DIVERSIFIED RETAIL REAL ESTATE PORTFOLIO

114 SHOPPING CENTERS 10,646,017 TOTAL SQFT

8 REGIONAL MALLS 3,847,075 TOTAL SQFT

36 SINGLE TENANT/OTHER 1,734,900 TOTAL SQFT

TOTAL PURCHASE PRICE $3.50 BILLION

PORTFOLIO FINANCIAL PERFORMANCE

The investment strategy proposed consists of creaGng a $1.5 Billion Investment Fund for the sole purpose of acquiring and restructuring Vornado’s retail porcolio in preparaGon for IPO as a new REIT enGty. AcquisiGon will be completed with $1.45 Billion in Equity and an addiGonal $918 MM of Debt, net of the exisGng $1.257B in debt being assumed as part of the acquisiGon. Furthermore, CapEx reserves have been set aside in the amount of $97MM for upgrades and renovaGons pre-‐IPO. Based on industry comps, the post-‐IPO equity “pop” will create approx. $1.9 Billion in equity value thereby effecGvely reducing the loan to enterprise value from 63% to 41%.

Equity Investment

Net Cash Flow

Mul4ple on Equity

IRR

Fund-‐Level $1,236 $978 1.79x 23.64%

LP $1,175 $809 1.69x 20.07%

GP $61 $51 1.83x 22.67%

Fund Manager $0 $119 NA NA

RETAIL REIT SUBSECTOR

INDUSTRY SNAPSHOT

RETAIL REIT SUBSECTO

R PERFORM

ANCE

MARKET ACTIVITY SUMMARY

High occupancies and rental growth rates are evident for Retail REITs, boosGng net operaGng income even as retail traffic and sales growth slows. This may conGnue in 2014, given low occupancy costs and in-‐place rents, in tandem with modest new supply, especially among higher-‐end properGes. Retail REIT shares had a high negaGve correlaGon with rising interest rates in 2013. This may conGnue in 2014.

Jeffrey Langbaum Bloomberg

CAP RATES (%) – 3 MONTH ROLLING AVG.

0

500

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Nov-‐10

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1

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Chart Title

Moody's/RCA CPPI Retail

Cap Rates(%) -‐ 3mo Rolling Avg

NCREIF Retail Property Index

RETAIL REIT PRICE TO FFO TTM

RETAIL CRE SALES VOLUME & PRICE PER SQFT – 3mo ROLLING AVG

6.4 6.6 6.8 7

7.2 7.4 7.6 7.8

0

5

10

15

20

25

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

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2013 Q1

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2013 Q4

$0 $50 $100 $150 $200 $250 $300

$0

$5,000

$10,000

$15,000

$20,000

$25,000

11/2010

1/2011

3/2011

5/2011

7/2011

9/2011

11/2011

1/2012

3/2012

5/2012

7/2012

9/2012

11/2012

1/2013

3/2013

5/2013

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9/2013

Sales Volume ($M) -‐ 3mo Rolling Sum Price per Square Foot -‐ 3mo Rolling Avg

Consensus esGmates call for 7.3% growth in 2014 dividends for REITs. REITs operate at an average payout raGo of 60.4% of consensus 2014 FFO, suggesGng room for dividends to increase as earnings grow. Analysts forecast an average 8.3% FFO per share growth for REITs in 2014.


REITs may increase their 2014 acquisiGons volumes, and external earnings growth, if rising interest rates drive a corresponding increase in cap rates. REITs have reduced acquisiGon volumes during the past several years as cap rates fell. Health-‐care REITs have been the excepGon, taking advantage of a historically low cost of capital to grow. If rising cap rates offset increased capital costs, REITs may becoming more acGve buyers.


VORNADO RETAIL PORFOLIO

TRANSACTION DETAILS

VORN

ADO RETAIL PO

RTFOLIO

VORNADO RETAIL PROPERTY PORFOLIO VALUATION

REGIONAL MALL PORTFOLIO BY GEOGRAPHY

State/Province Number of Proper4es

Size (sq. i.)

Owned Gross Leasable Area

(sq. i.) Percent

of Type (%) New Jersey, USA 39 7,495,816 4,311,816 47.23 New York, USA 20 2,976,228 2,373,228 18.75 Pennsylvania, USA 12 2,222,848 1,405,848 14.01 California, USA 17 1,038,000 1,038,000 6.54 Maryland, USA 5 564,000 508,000 3.55 Massachusens, USA 4 537,000 164,000 3.38 ConnecGcut, USA 2 363,000 172,000 2.29 Virginia, USA 2 152,000 152,000 0.96 Illinois, USA 2 87,000 87,000 0.55 Michigan, USA 2 78,000 78,000 0.49 Texas, USA 2 74,000 74,000 0.47 Ohio, USA 1 47,000 47,000 0.30 South Carolina, USA 1 45,000 45,000 0.28 Tennessee, USA 1 45,000 45,000 0.28 Wisconsin, USA 1 43,000 43,000 0.27 District of Columbia, USA 1 39,125 39,125 0.25 Kentucky, USA 1 32,000 32,000 0.20 Iowa, USA 1 31,000 31,000 0.20 Totals 114 15,870,017 10,646,017 100.00

SHOPPING CENTER PORTFOLIO BY GEOGRAPHY

State/Province Number of Proper4es

Size (sq. i.)

Owned Gross Leasable Area

(sq. i.) Percent

of Type (%) New Jersey, USA 2 1,680,000 1,323,000 28.94 New York, USA 2 1,655,000 1,279,000 28.51 Virginia, USA 2 1,434,450 348,075 24.71 Puerto Rico, USA 2 1,036,000 897,000 17.85 Totals 8 5,805,450 3,847,075 100.00

VNO RETAIL PORTFOLIO NET OPERATING INCOME

$252MM

PROPERTY SQFT WEIGHTED

AVERAGE CAP RATE

7.21%

DIRECT CAPITALIZATION VALUE OF THE PORTFOLIO

$3.499B

Source: VNO 2012 10K Source: REIS market data

VORN

ADO RETAIL PO

RFOLIO

VORNADO RETAIL PORFOLIO ACQUISITION ASSUMPTIONS

ACQUISITION PRICE $3,499.8

ACQUISITION FEE 0.5%

LOAN FEES 1.0%

CLOSING COSTS & EXPENSES 2.5%

LOAN-‐TO-‐VALUE 63%

LOAN INTEREST RATE 5.25%

UNLEVERED ANNUAL YIELD ON ALL-‐IN COST 6.0%

NOI ANNUAL GROWTH RATE 1.0%

GENERAL EXPENSE INFLATION 3.0%

CAPEX (AS A % OF ALL-‐IN COST) 4.0%

EXISTING FIXED RATE PROPERTY DEBT ASSUMED EXISTING FLOATING RATE PROPERTY DEBT ASSUMED

Cross-‐collateralized mortgages on 40 strip shopping centers 60,000

Bergen Town Center 0

Other 17,000

Cross-‐collateralized mortgages on 40 strip shopping centers 563,692

Bergen Town Center 300,000

Montehiedra Town Center 120,000

North Bergen (Tonnelle Avenue) 75,000

Las Catalinas Mall 52,822

Broadway Mall 0

Other 68,659

The acquisiGon of Vornado’s retail porcolio will have an all-‐in-‐cost of approx. $3.6B arer fees and closing costs. As a condiGon of the purchase, the exisGng debt in the amount of $1.25B will be assumed. The exisGng loan to value of the property porcolio equates to 36%. In order to achieve an opGmal return on the investment, the porcolio will be levered up to 63% by increasing the exisGng debt amount by an addiGonal $1.02B. Therefore, the equity to raise equates to approximately $1.35B. As a maner of fundamentals, very conservaGve growth assumpGons were used. This is primarily due to the uncertainty of the future macro-‐economic drivers of the retail industry going forward the next couple years. Moreover, a 4% capital reserve was established for major capital improvements toward relevant properGes.

.0x 20.0x 40.0x 60.0x 80.0x 100.0x

12/31/2012 AFFO:12/31/2011 AFFO:

TTM AFFO:12/31/2012 FFO:12/31/2011 FFO:

TTM FFO:

Min to 25th

25th to Median

Median to 75th

75th to Max

Public Company Comparables

RELATIVE VALUATIO

N – PO

ST IPO VALU

E

RETAIL REIT INDUSTRY VALUATION COMPS

IMPLIED CAP RATE BY STOCK PRICE

IMPLIED CAP RATE

IMPLIED VALUATION

NET OPERATING INCOME 4.0% $5.6B

VALUE OF VNO RETAIL PORTFOLIO FFO/AFFO MULTIPLES

MULTIPLE VALUATION

2014E FFO MULTIPLE VALUATION 29.3x $5.332B

2014E AFFO MULTIPLE VALUATION 29.9x $4.796B

Valuation Statistics Net Cap Rate Equity Value / Equity Value / Share Equity Operating Implied by Funds from Operations(4) Adjusted Funds from Operations(5)

Company Name Ticker Price Value(1) Income(2) Stock Price(7) TTM 2013E 2014E TTM 2013E 2014EAcadia Realty Trust AKR 26.33$ 3,011$ 111$ 3.1% 24.4 x 54.6 x 59.4 x 22.2 x 22.2 x 85.5 xCBL & Associates Properties Inc CBL 23.98 9,096$ 730$ 4.4% 9.6 x 26.6 x 26.3 x 10.8 x 10.8 x 29.8 xCedar Realty Trust Inc CDR 5.81 1,420$ 96$ 3.8% 12.7 x 41.8 x 38.7 x 12.2 x 12.2 x 30.6 xDDR Corp DDR 17.78 10,281$ 575$ 3.7% 15.8 x 32.0 x 29.1 x 16.4 x 16.4 x 32.0 xEquity One Inc EQY 24.13 4,732$ 247$ 3.7% 26.9 x 34.0 x 32.1 x 19.5 x 19.5 x 25.1 xGlimcher Realty Trust GRT 12.00 3,591$ 216$ 3.6% 16.3 x 49.5 x 57.0 x 17.0 x 17.0 x 61.2 xInland Real Estate Corp IRC 10.66 1,765$ 107$ 3.9% 10.4 x 19.2 x 20.0 x 11.6 x 11.6 x 22.3 xKimco Realty Corp KIM 23.12 14,667$ 693$ 3.5% 17.6 x 27.2 x 26.0 x 17.7 x 17.7 x 26.2 xKite Realty Group Trust KRG 6.12 1,409$ 77$ 3.2% 14.7 x 43.9 x 43.9 x 13.2 x 13.2 x 48.3 xMacerich Co/The MAC 65.69 14,928$ 499$ 2.6% 15.7 x 31.8 x 30.8 x 18.9 x 18.9 x 40.1 xPennsylvania Real Estate Investment Trust PEI 20.85 2,988$ 251$ 4.3% 12.0 x 29.8 x 31.1 x 11.0 x 11.0 x 27.6 xRamco-‐Gershenson Properties Trust RPT 15.96 1,848$ 97$ 3.9% 15.7 x 24.6 x 25.4 x 2.1 x 2.1 x 29.9 xRegency Centers Corp REG 54.27 7,084$ 374$ 3.9% 20.6 x 30.4 x 29.4 x 21.1 x 21.1 x 29.3 xRetail Opportunity Investments Corp ROIC 14.15 1,305$ 60$ 3.7% 18.2 x 20.3 x 22.7 x 20.3 x 20.3 x 23.7 xRioCan Real Estate Investment Trust REI-‐U 25.10 14,043$ 721$ 3.6% 18.3 x 30.3 x 29.0 x 16.2 x 16.2 x 32.3 xTanger Factory Outlet Centers SKT 35.61 4,556$ 237$ 3.9% 21.5 x 25.9 x 24.6 x 20.5 x 20.5 x 25.2 xTaubman Centers Inc TCO 79.96 8,232$ 476$ 3.7% 23.1 x 38.1 x 35.8 x 22.8 x 22.8 x 36.4 xWeingarten Realty Investors WRI 32.54 6,733$ 345$ 3.5% 16.7 x 29.2 x 27.9 x 16.7 x 16.7 x 28.5 xMaximum 14,928$ 730$ 4.4% 26.9 x 54.6 x 59.4 x 22.8 x 22.8 x 85.5 x75th Percentile 8,880 493 3.9% 20.0 x 37.1 x 34.9 x 20.1 x 20.1 x 35.4 xMedian 4,644$ 249$ 3.7% 16.5 x 30.3 x 29.3 x 16.9 x 16.9 x 29.9 x25th Percentile 2,133 108 3.5% 14.9 x 26.7 x 26.1 x 12.4 x 12.4 x 26.6 xMinimum 1,305 60 2.6% 9.6 x 19.2 x 20.0 x 2.1 x 2.1 x 22.3 xVornado Realty Trust VNO 88.91$ 16,704$ 1,410$ 5.7% N/A 13.3 x 21.0 x N/A 7.0 x 8.5 x

VORN

ADO RETAIL PO

RTFOLIO

PRO FO

RMA

VNO RETAIL PORTFOLIO TRANSACTION 3-‐YEAR QUARTERLY CASH FLOW PRO-‐FORMA (in Millions)Acquisition Assumptions Financing Assumptions Cash Flow Assumptions Disposition AssumptionsPurchase Price $3,499.8 LTV 63.00% Unleveraged Annual Yield on All-‐In Cost6.00% Yr 1 NOI $218 Year of IPO (EOY) Year 3Acquisition Fee 0.5% $17 Mortgage -‐ 5-‐Year Interest-‐Only$2,285 NOI Annual Growth Rate -‐ Yr 2 1.00% Yr 2 NOI $222 Year of IPO NOI $224Loan Fees 1.0% $22 Acq. Costs Interest Rate 5.25% NOI Annual Growth Rate -‐ Yr 3 1.00% Yr 3 NOI $224 IPO Cap Rate Implied By Comps4.00%Closing Costs & Expenses 2.5% $87 $127 NOI Annual Growth Rate -‐ Yr 4 1.00% Yr 4 NOI $0 IPO Costs 6.00%All-‐In Cost $3,627 Transaction Equity Investment$1,485 NOI Annual Growth Rate -‐ Yr 5+ 1.00%

General Expense Inflation 3.00%Capex (as a % of All-‐in Cost) 4.00% $137

Year 1 Year 1 Year 1 Year 1 Year 2 Year 2 Year 2 Year 2 Year 3 Year 3 Year 3 Year 3Data Series Time 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Total ProfileNET OPERATING INCOME $664 $54 $54 $54 $55 $55 $55 $55 $55 $56 $56 $56 $56Unlevered Annual Yield 6.1% 6.1% 6.2%CAPITAL EXPENDITURES $137 24 24 24 24 5 5 5 5 5 5 5 5NET CASH FLOW ($3,099) ($3,627) $30 $30 $30 $31 $50 $50 $50 $50 $51 $51 $51 $51

FINANCINGBeginning Balance $2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285Interest Payment 30 30 30 30 30 30 30 30 30 30 30 30Draw 0 0 0 0 0 0 0 0 0 0 0 0Ending Balance $2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285 2,285

TotalTOTAL DEBT SERVICE $360 30 30 30 30 30 30 30 30 30 30 30 30DSCR 1.01x 1.01x 1.01x 1.03x 1.68x 1.68x 1.68x 1.68x 1.70x 1.70x 1.70x 1.70x

NET DISTRIBUTABLE CASH FLOW ($1,174) ($1,342) $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $21Levered Yield On Original Equity Investment 0.2% 6.1% 6.3%

Residual Proceeds TotalSale Amount $5,605 0 0 0 0 0 0 0 0 0 0 0 5,605Less: Debt $2,285 0 0 0 0 0 0 0 0 0 0 0 2,285Less: Cost of Sale $336 0 0 0 0 0 0 0 0 0 0 0 336Net Sales Proceeds to Equity $2,984 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,984

IRRUNLEVERED CASH FLOW 17.73% $2,170 ($3,627) $30 $30 $30 $31 $50 $50 $50 $50 $51 $51 $51 $5,320LEVERED CASH FLOW 33.65% $1,810 ($1,342) $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $3,005

PARTNER LINES BELOW TotalManager/Fund Cash Flow $1,042 $1,042 ($1,208) $0 $0 $0 $1 $18 $18 $18 $18 $19 $19 $19 $2,118POST-‐PROMOTE CASH FLOW (from Promote Tab)Partner $767 $767 ($134) $0 $0 $0 $0 $2 $2 $2 $2 $2 $2 $2 $887Transaction $1,810 $1,810 ($1,342) $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $3,005

THE FUND

TERMS & STRUCTURE

VORN

ADO RETAIL REIT IPO

FUND TRAN

SACTION

SCHACK RETAIL IPO CAPITAL FUND

In preparaGon for the acquisiGon of Vornado’s Retail Porcolio, a fund has been created for accredited investors seeking a 20% + IRR return on their money through the investment and subsequent IPO restructuring of the retail porcolio. Schack Real Estate Fund will act as Equity Partner of the new joint venture. Furthermore, we will team up with The RE IPO Group. As a pioneer in the real estate M&A space, their wealth of knowledge and experience will ensure that our investor’s capital is effecGvely uGlized.

SCHACK RETAIL IPO FUND TERMS & STRUCTURE

VORNADO RETAIL IPO TRANSACTION PARTNER PROMOTE

General Fund Terms

Total Capital Commitment $1.342B

Fund Start-‐Up Costs $5MM

Capital Commitments, net $1.337B

Limited Partnership Ownership Share 95%

Annual Management Fee 1%

# of TransacGons in Fund 1

Average TransacGon Investment $1.337B

Fund Timeline in Years 3 YRS

Fund Timeline in Quarters 12 QUARTERS

Opera4ng Assump4ons

AcquisiGon Fee (% of Equity) 0.50%

Annual OperaGng Expenses (Overhead) $500K

Expense InflaGon 3%

DisposiGon Fees* 1.00%

Reserve for ConGngencies (% of Overhead)

10.00%

*% of Fund Level NCF From Investments

Individual Transaction Partner PromotePartner Partner Partner

Total Project Equity * % Split Cash Contribution From Through Pro Rata Promote Total FundPartner Share 10.00% $134 Tier 1 0.0% 10.0% 10.00% 0.0% 10.00% 90.0%Manager/Fund Share 90.00% $1,208 Tier 2 10.0% 15.0% 10.00% 15.0% 25.00% 75.0%Total Project Equity 100.00% $1,342 Tier 3 15.0% 10.00% 50.0% 60.00% 40.0%

* Includes pro-‐rata share of any Operating DeficitTotal Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13

Manager/Fund Capital Contribution ($1,208) ($1,208) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Partner Capital Contribution ($134) ($134) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total JV Capital Contribution ($1,342) ($1,342) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Gross Proceeds to Joint Venture $3,152 $0 $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $3,005Distributable Cash Flow From Single Transaction $1,810 ($1,342) $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $3,005

Gross Proceeds Available to Manager/Fund $2,836 $0 $0 $0 $0 $1 $18 $18 $18 $18 $19 $19 $19 $2,704

Equity IRR (Project Level) 33.65%

TIER 1 IRR through: 10%BOP Manager/Fund Balance 2.41% $0 $1,208 $1,237 $1,266 $1,297 $1,327 $1,341 $1,355 $1,369 $1,383 $1,398 $1,412 $1,428Manager/Fund Injections $1,208 $1,208 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Manager/Fund Accruals $386 $0 $29 $30 $31 $31 $32 $32 $33 $33 $33 $34 $34 $34Tier 1 Manager/Fund Accrual Distribution ($1,594) $0 ($0) ($0) ($0) ($1) ($18) ($18) ($18) ($18) ($19) ($19) ($19) ($1,462)EOP Manager/Fund Balance $0 $1,208 $1,237 $1,266 $1,297 $1,327 $1,341 $1,355 $1,369 $1,383 $1,398 $1,412 $1,428 $0

Manager/Fund Cash Flow 90% $386 ($1,208) $0 $0 $0 $1 $18 $18 $18 $18 $19 $19 $19 $1,462Partner Equity Cash Flow 10% $177 $0 $0 $0 $0 $0 $2 $2 $2 $2 $2 $2 $2 $162Partner Promote Cash Flow 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Remaining Cash to Distribute $1,380 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,380

TIER 2 IRR through: 15%BOP Manager/Fund Balance 3.56% $0 $1,208 $1,250 $1,295 $1,341 $1,388 $1,418 $1,450 $1,483 $1,518 $1,553 $1,589 $1,627Manager/Fund Injections $1,208 $1,208 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Manager/Fund Accruals $609 $0 $43 $44 $46 $48 $49 $50 $52 $53 $54 $55 $57 $58Tier 1 Manager/Fund Accrual Distribution ($1,594) $0 ($0) ($0) ($0) ($1) ($18) ($18) ($18) ($18) ($19) ($19) ($19) ($1,462)Tier 2 Manager/Fund Accrual Distribution ($222) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($222)EOP Balance $0 $1,208 $1,250 $1,295 $1,341 $1,388 $1,418 $1,450 $1,483 $1,518 $1,553 $1,589 $1,627 $0

Manager/Fund Cash Flow 75% $222 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $222Partner Equity Cash Flow 10% $30 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $30Partner Promote Cash Flow 15% $44 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $44

Remaining Cash to Distribute $1,084 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,084

TIER 3 IRR above: 15%Manager/Fund Cash Flow 40% $434 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $434Partner Equity Cash Flow 10% $108 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $108Partner Promote Cash Flow 50% $542 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $542

Remaining Cash to Distribute $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

RETURNS SUMMARY Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13

Total Project Cash Flow ($1,342) $0 $0 $0 $1 $21 $21 $21 $21 $21 $21 $21 $3,005IRR 33.65%Net Cash Flow $1,810Invested Equity $1,342Cash Flow Multiple 2.35x

Manager/Fund Cash Flow ($1,208) $0 $0 $0 $1 $18 $18 $18 $18 $19 $19 $19 $2,118IRR 23.64%Net Cash Flow $1,042Invested Equity $1,208Cash Flow Multiple 1.86x

Partner Cash FlowPartner Injections ($134) ($134) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Partner Equity Cash Flow $315 $0 $0 $0 $0 $0 $2 $2 $2 $2 $2 $2 $2 $300Partner Promote Cash Flow $586 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $586Net Cash Flow $767 ($134) $0 $0 $0 $0 $2 $2 $2 $2 $2 $2 $2 $887

IRR 89.73%Invested Equity $134Cash Flow Multiple 6.72x

Quarterly IRR Range

10.00%25.00%

60.00%

90.0%75.0%

40.0%

Tier 1 Tier 2 Tier 3

Profit Sharing At Each TierPartner Manager/Fund

THE FUND STRU

CTURE

SCHACK RETAIL REIT IPO FUND CASH FLOW MODEL

The Schack IPO Fund is targeted toward accredited investors seeking a risk-‐adjusted IRR above 20%. The fund will remain closed through the investment holding period and lock-‐out period aier the prospec4ve IPO. The general terms of the fund structure are listed below. Furthermore, the equity sources and uses are detailed on the previous sheet.

Year 1 Year 1 Year 1 Year 1 Year 2 Year 2 Year 2 Year 2 Year 3 Year 3 Year 3 Year 3

2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016Total Over Data Series 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

NET CASH FLOW TO FUND Life Of Fund ProfileNet Cash Flow To Fund From InvestmentsVornado Retail Portfolio IPO $1,042 (1,208) 0 0 0 1 18 18 18 18 19 19 19-‐ $0 0 0 0 0 0 0 0 0 0 0 0 0-‐ $0 0 0 0 0 0 0 0 0 0 0 0 0-‐ $0 0 0 0 0 0 0 0 0 0 0 0 0-‐ IRR $0 0 0 0 0 0 0 0 0 0 0 0 0

Fund Level NCF From Investments 23.64% $1,042 ($1,208) $0 $0 $0 $1 $18 $18 $18 $18 $19 $19 $19Cumulative Fund Level NCF (1,208) (1,208) (1,207) (1,207) (1,206) (1,188) (1,169) (1,151) (1,133) (1,114) (1,095) (1,076)

Total OverPlus Fund-‐Level Expenses Life Of FundStart-‐up Costs ($5) (5) 0 0 0 0 0 0 0 0 0 0 0Acquisition Fee ($6) (6) 0 0 0 0 0 0 0 0 0 0 0Disposition Fee ($21) 0 0 0 0 0 0 0 0 0 0 0 0Fund Level Overhead ($7) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1)Reserve for Overhead Contingencies ($1) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)Total Fund-‐Level Expenses ($40) ($12) ($1) ($1) ($1) ($1) ($1) ($1) ($1) ($1) ($1) ($1) ($1)

IRRFund-‐Level NCF After Expenses 22.67% $1,003 ($1,219) ($0) ($0) ($0) $0 $18 $18 $18 $18 $18 $18 $18

OwnershipGP Cash Flow 5.00% 22.67% $50 (61) (0) (0) (0) 0 1 1 1 1 1 1 1Remaining Cash Flow for LP and Fund Manager $953 (1,158) (0) (0) (0) 0 17 17 17 17 17 17 17Plus Management Fees IRR ($38) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3)Net Cash Flow For LP And Fund Manager 21.62% $914 ($1,162) ($4) ($4) ($4) ($3) $14 $14 $14 $14 $14 $14 $14Cumulative Cash Flow Net of GP Cash Flow (1,162) (1,165) (1,169) (1,172) (1,175) (1,161) (1,148) (1,134) (1,120) (1,106) (1,091) (1,077)

Net Cash Flow To Fund (GP, LP and Fund Manager) 21.67% $964 ($1,223) ($4) ($4) ($4) ($3) $15 $15 $15 $15 $15 $15 $15

LP CAPITAL ACCOUNT PREFERRED RETURN CALCULATION Total OverBeginning Balance Life Of Fund 0 (1,162) (1,201) (1,242) (1,284) (1,327) (1,354) (1,382) (1,411) (1,441) (1,472) (1,503)LP Equity Drawn ($1,175) (1,162) (4) (4) (4) (3) 0 0 0 0 0 0 0Preferred Return Accrual 12.41% Quarterly ($506) 0 (36) (37) (39) (40) (41) (42) (43) (44) (45) (46) (47)Pro Rata CF $1,681 0 0 0 0 0 14 14 14 14 14 14 14Ending Balance (1,162) (1,201) (1,242) (1,284) (1,327) (1,354) (1,382) (1,411) (1,441) (1,472) (1,503) (1,536)

PARTNERSHIP CASH FLOW DISTRIBUTIONLP Investments/Distributions $506 (1,162) (4) (4) (4) (3) 14 14 14 14 14 14 14Net Cash Available To LP and Fund Manager GP Max. Share $408 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Fund Manager Promote Share 19.00% 13.20% $78 0 0 0 0 0 0 0 0 0 0 0 0LP Share 81.00% GP Current Share $331 0 0 0 0 0 0 0 0 0 0 0 0

GP Cash Flow 13.24% $50 (61) (0) (0) (0) 0 1 1 1 1 1 1 1Total Partnership Cash Flow $964 (1,223) (4) (4) (4) (3) 15 15 15 15 15 15 15

OK OK OK OK OK OK OK OK OK OK OK OKSUMMARY OF INVESTOR CASH FLOWS % Total IRRAll LP Cash Flow (Distributions + Share of Net Cash) 86.76% 20.07% $837 (1,162) (4) (4) (4) (3) 14 14 14 14 14 14 14GP Cash Flow 22.67% $50 (61) (0) (0) (0) 0 1 1 1 1 1 1 1Fund Manager Share of Net Cash Flow 13.24% $78 0 0 0 0 0 0 0 0 0 0 0 0Total Cash Flow 100.00% 21.67% $964 (1,223) (4) (4) (4) (3) 15 15 15 15 15 15 15

OK OK OK OK OK OK OK OK OK OK OK OKSUMMARY OF EQUITY INVESTMENTLP Equity Investment 95.064% ($1,175) (1,162) (4) (4) (4) (3) 0 0 0 0 0 0 0GP Equity Investment 4.936% ($61) (61) (0) (0) (0) 0 0 0 0 0 0 0 0Total Equity Investment 100.000% ($1,236) (1,223) (4) (4) (4) (3) 0 0 0 0 0 0 0

SUMMARY OF FEE INCOME TO FUND MANAGERAcquisition Fees $6 6 0 0 0 0 0 0 0 0 0 0 0Disposition Fees $21 0 0 0 0 0 0 0 0 0 0 0 0Total Fees $27

1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016Assets Under Management $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275 $1,275

General AssumptionsTotal Capital Commitment $1,342Fund Start-‐Up Costs $5Capital Commitment, Net $1,337Limited Partnership Ownership Share 95.00%

Annual Management Fees 1 to 3 1.00%# of Transactions in Fund 1 Average Transaction Investment $1,337Fund Timeline in Years 3 yearsFund Timeline in Quarters 12 quarters

Years

Acquisition Timing AssumptionsMonths To Investment #1 3 monthsInterval Length 1 Quarter 3 months

Hold PeriodInvestment # in Months

#1 31-‐Mar-‐14 1Q2014 36 31-‐Mar-‐17 1Q2017-‐ 30-‐Jun-‐14 2Q2014 0 30-‐Jun-‐14 2Q2014-‐ 30-‐Sep-‐14 3Q2014 0 30-‐Sep-‐14 3Q2014-‐ 30-‐Dec-‐14 4Q2014 0 30-‐Dec-‐14 4Q2014-‐ 30-‐Mar-‐15 1Q2015 0 30-‐Mar-‐15 1Q2015

Acquisition DispositionDate Date

Waterfall Hurdle Rate AssumptionsLP Preferred Return (Annual Compounding) 13.00%LP Preferred Return (Quarterly Compounding) 12.41%

Tier 2LP Share of Net Cash Flow 81.00%Fund Manager Share of Net Cash Flow 19.00%

Up to 13.20% of Profits

THE FUND

SCHACK RETAIL PORTFOLIO IPO TIMELINE

8 WEEKS

PRE-‐FILING PHASE Org MeeGng Due Diligence Develop Financial Model Draring Filing

8-‐12 WEEKS

ROADSHOW PREPARATION & SEC REVIEW PERIOD

4 WEEKS

PRINT RED HERRINGS SALES FORCE PRESENTATION ROAD SHOW PRICING CLOSING

RETURNS TO EQUITY INVESTORS (in millions) INVESTMENT RETURN SUMMARY

Due to the highly accreGve deal structure, the investor returns meet the required return. The partner enGty achieves well above 60% IRR due to the 90%/10% split and the partner promote of residual cash flow of 50%. The Manger/Fund cash flows return an IRR of approximately 25% to the Fund. Furthermore, at the fund level, the LP equity interest of our investors achieves a 20% IRR, while the GP/ Fund Manager achieves a 22.67% IRR. Total investor cash flow to the LP interest is $837MM on the equity investment of $1.175B. Moreover, the GP cash flow total is $50MM on $61MM of equity invested plus the Fund Manger’s share of Net Cash Flow totaling $78MM.

GP as GP LPs Fund

Ownership 5.00% 0.00% 95.00% 100.00%

Capital Invested $61 $0 $1,175 $1,236

Net Cash Flow $50 $78 $837 $964

Multiple On Equity 1.82x NA 1.71x 1.78x

IRR 22.67% NA 20.07% 21.67%

Share of Total Profits 5.20% 8.04% 86.76%

GP as Fund Manager

VORNADO MOTIVATION & IMPACT

EQUITY VALUE

VORN

ADO FIN

ANCIAL SU

MMARY

VORNADO DISPOSITION RETURN ANALYSIS

The success of the Retail REIT transacGon resides with the degree of benefit Vornado has in relinquishing it’s largest holding segment, in terms of property count. In Vornado’s 2012 annual report, Chairman & CEO, Steven Roth, outlined a plan to focus Vornado on it’s core business of office and retail in New York City and Washington D.C. This leaves a number of non-‐core assets that Vornado plans to dispose of including their US diversified Regional Mall and Shopping Center Porcolio. Based on our analysis of Vornado’s current holdings and equity valuaGon as compared to industry compeGtors in their newly-‐defined core asset class, we believe that the gross disposiGon of their enGre non-‐core retail porcolio will unlock the needed capital to provide shareholder’s with (1) a reducGon in mortgage debt of $1.3B through the IPO fund’s assumpGon of the exisGng mortgage debt on the property and (2) an influx of capital to redistribute into core assets, distribute as dividends to shareholders, or buy-‐back stock and/or preferred. The bonom line is that the deal will increase FFO per diluted share by 43.6% Y-‐O-‐Y in the first year. Furthermore, with the reducGon in debt and potenGal increase in core-‐rental income, the consistently elevated dividend payout gives Vornado a Dividend Discount Model valuaGon of $101 a share using a Terminal FFO MulGple of 18x and a WACC of 7.8%. In addiGon, the deal would contribute to a Net Asset Value increase of 22% in the first year following the transacGon. That puts Vornado’s Net Asset Value per Share at approximately $140. Moreover, a discounted cash flow analysis of the free cash flow to equity, gives Vornado an astounding $213.75 a share valuaGon. In summary, Vornado stands to increase their valuaGon within a median range of $1.34 per share to $29.49 per share depending on the flow of funds into the REIT space over the next couple years. Currently, comparable REITs are trading well below their fair value NAV. This is usually an indicator of investor senGment toward CRE and the risk , as well as, growth potenGal in the REIT sector.

Vornado Realty Trust -‐ Net Asset Valuation($ in Millions)

Historical ProjectedDecember 31, 2010 2011 2012 2013 2014 2015 2016

Capitalized Income:Forward Property Net Operating Income: 1,588$ 1,600$ 1,750$ 1,828$ 1,914$ 2,009$ 2,112$ Assumed Cap Rate: 5.9% 5.9% 5.9% 5.9% 5.9% 5.9% 5.9%

Forward Management Fees NOI: 150 145 147 147 147 147 147 Assumed Cap Rate: 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%

Value of Capitalized Income: 27,610 27,799 30,339 31,661 33,121 34,722 36,468

Plus Market Value of Other Real Estate Assets:Construction in Progress, Including Land: 218 116 852 789 725 662 599 Adjustment for NPV of Construction: 120.0% 120.0% 120.0% 120.0% 120.0% 120.0% 120.0%

Market Value of Construction in Progress: 262 139 1,022 946 871 795 719

Land Held for Development: -‐ -‐ -‐ -‐ -‐ -‐ -‐ Adjustment for NPV of Land: 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0%

Market Value of Development Land: -‐ -‐ -‐ -‐ -‐ -‐ -‐

Real Estate Assets Held for Sale: 202 134 -‐ 399 311 222 133

Plus Non-‐Real Estate Assets:Cash & Cash-‐Equivalents: 691 607 960 2,072 2,877 2,724 3,265 Cash in Escrow: 201 98 183 241 299 357 415 Resident Security Deposits: 853 1,239 961 999 1,048 1,102 1,160 Deferred Financing Fees, Net: 355 526 682 777 872 967 1,062 Deferred Development Costs: 57 88 225 145 148 152 158 Prepaid Expenses & Other Assets: 1,892 2,096 999 1,249 1,322 1,402 1,488

Investments in Equity Interests: 1,375 1,740 1,704 1,685 1,667 1,648 1,629 Adjustment for Eq. Int. Capitalized Inc.: 80.0% 80.0% 80.0% 80.0% 80.0% 80.0% 80.0%

Market Value of Equity Interests: 1,100 1,392 1,363 1,348 1,333 1,318 1,303

Total Tax-‐Exempt Bonds: 701 792 727 685 768 787 857 Total Debt, Net of Discounts: 10,889 10,077 11,296 9,911 11,113 11,394 12,401 Tax-‐Exempt Bonds % Debt: 6.4% 7.9% 6.4% 6.9% 6.9% 6.9% 6.9%

Tax-‐Exempt Debt Subsidy %: 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%Cap Rate: 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5%Benefit of Tax-‐Exempt Debt: 124 140 128 121 136 139 151

Market Value of Assets: 33,347$ 34,257$ 36,863$ 39,959$ 42,338$ 43,900$ 46,323$

Less Total Liabilities:Total Debt, Net of Discounts: 10,889$ 10,077$ 11,296$ 9,911$ 11,113$ 11,394$ 12,401$ Dividends Payable: -‐ -‐ -‐ -‐ -‐ -‐ -‐ Construction Payables: 438 424 485 485 485 485 485 Accrued Expenses & Other Liabilities: 351 653 718 428 453 480 510 Accrued Interest Payable: -‐ -‐ -‐ -‐ -‐ -‐ -‐ Resident Security Deposits: 681 625 619 633 664 698 735 Liabilities for RE Assets Held for Sale: -‐ -‐ -‐ -‐ -‐ -‐ -‐

Total Liabilities: 12,359 11,778 13,118 11,456 12,714 13,057 14,130

Less Claims on Equity:Noncontrolling Interests: 515 686 1,026 1,098 1,170 1,241 1,313 Preferred Stock: 783 1,022 1,286 1,346 1,406 1,466 1,525

Total Claims on Equity: 1,298 1,708 2,312 2,444 2,575 2,707 2,838

Net Asset Value: 19,690$ 20,771$ 21,434$ 26,059$ 27,049$ 28,136$ 29,354$

VORNADO NET ASSET VALUE CALCULATION

VORNADO QUANTITATIVE ANALYSIS

APPENDIX

VORNADO RELATIVE VALUATION

Operating Statistics Net TTM GrossEquity Operating Book Funds from Operations(4) Adjusted Funds from Operations(5) RE Operating

Company Name Value(1) Income(2) Cap Rate(3) TTM 12/31/2013 12/31/2014 TTM 12/31/2013 12/31/2014 Geographies Assets(6)

Boston Properties 16,782$ 1,030$ 5.5% 828$ 816$ 896$ 666$ 610$ 675$ US Diversified 18,832$ SL Green Realty Corp 8,843 604 4.6% 491 486 549 362 368 375 US Diversified 13,027 Equity Residential 18,818 1,219 6.0% 993 1,044 1,158 883 886 1,046 US Diversified 20,267 Corporate Office Properties Trust 2,108 258 9.7% 191 151 177 171 140 140 US Diversified 2,656

Maximum 18,818$ 1,219$ 9.7% 993$ 1,044$ 1,158$ 883$ 886$ 1,046$ 20,267$ 75th Percentile 17,291 1,077 6.9% 869 873 961 720 679 768 19,191 Median 12,812$ 817$ 5.7% 659$ 651$ 722$ 514$ 489$ 525$ 15,930$ 25th Percentile 7,159 517 5.3% 416 403 456 315 311 316 10,434 Minimum 2,108 258 4.6% 191 151 177 171 140 140 2,656

Vornado Realty Trust 16,699$ 1,745$ 9.4% 818$ 1,166$ 1,132$ 558$ 893$ 853$ US Diversified 18,495$

Valuation Statistics Net Cap Rate Equity Value / Equity Value / Equity Operating Implied by Funds from Operations(4) Adjusted Funds from Operations(5)

Company Name Value(1) Income(2) Stock Price(7) TTM 12/31/2013 12/31/2014 TTM 12/31/2013 12/31/2014Boston Properties 16,782$ 1,030$ 3.8% 20.3 x 20.6 x 18.7 x 25.2 x 27.5 x 24.9 xSL Green Realty Corp 8,843 604 3.9% 18.0 x 18.2 x 16.1 x 24.4 x 24.1 x 23.6 xEquity Residential 18,818 1,219 4.6% 18.9 x 18.0 x 16.3 x 21.3 x 21.2 x 18.0 xCorporate Office Properties Trust 2,108 258 6.0% 11.1 x 13.9 x 11.9 x 12.3 x 15.1 x 15.0 x

Maximum 18,818$ 1,219$ 6.0% 20.3 x 20.6 x 18.7 x 25.2 x 27.5 x 24.9 x75th Percentile 17,291 1,077 4.9% 19.3 x 18.8 x 16.9 x 24.6 x 24.9 x 23.9 xMedian 12,812$ 817$ 4.2% 18.5 x 18.1 x 16.2 x 22.9 x 22.6 x 20.8 x25th Percentile 7,159 517 3.9% 16.3 x 17.0 x 15.0 x 19.1 x 19.7 x 17.3 xMinimum 2,108 258 3.8% 11.1 x 13.9 x 11.9 x 12.3 x 15.1 x 15.0 x

Vornado Realty Trust 16,699$ 1,745$ 6.8% 20.4 x 14.3 x 14.7 x 29.9 x 18.7 x 19.6 x(1) Valuation as of 07/22/2013.(2) Net Operating Income defined as Property Revenue less Property-‐Level Expenses (excludes all CapEx).(3) Book Cap Rate defined as TTM Net Operating Income divided by Gross Real Estate Operating Assets.(4) Funds from Operations defined in accordance with NAREIT definition: Net Income to Common + Real Estate Depreciation & Amortization+ Loss / (Gain) on Sale of Depreciable Real Estate Assets.(5) Adjusted Funds from Operations defined as Funds From Operations -‐ Recurring Maintenance CapEx + Stock-‐Based Compensation+ Amortization of Financing Fees + Amortization of Debt Premium/Discount + Loss / (Gain) on Sale of Undepreciable Real Estate Assets.(6) Gross Real Estate Operating Assets defined as Land + Buildings & Improvements + Furniture, Fixtures & Equipment.Excludes Construction in Progress, Land Held for Development, RE Assets Held for Sale, JV Interests in RE Assets, and Accumulated Depreciation.(7) Cap Rate Implied by Stock Price calculated by dividing TTM Net Operating Income by (Equity Value -‐ Non-‐RE Assets + Total Liabilities+ Preferred Stock + Noncontrolling Interests).

ALEXANDER EQUITY INTEREST RELATIVE VALUATION

Operating Statistics Net TTM GrossShare Equity Operating Book Funds from Operations Per Share Dividends Per Share RE Operating

Company Name Ticker Price Value Income Cap Rate TTM 2013E 2014E TTM 2013E 2014E Geographies Assets(6)CBL & ASSOCIATES PROPERTIES CBL 23.98$ $9,096 $709 10.8% $2.41 $2.21 $2.23 $0.83 $0.94 $0.96 US $6,557PENN REAL ESTATE INVEST TST PEI 20.85$ $2,988 $242 9.5% $1.63 $1.88 $1.96 $0.63 $0.73 $0.78 US $2,552EQUITY ONE INC EQY 24.13$ $4,732 $231 7.6% $0.85 $1.22 $1.29 $0.88 $0.88 $0.90 US $3,057RETAIL PROPERTIES OF AME -‐ A RPAI 14.86$ $5,924 $383 8.2% $1.07 $1.05 $1.01 $0.66 $0.66 $0.66 US $4,696RAMCO-‐GERSHENSON PROPERTIES RPT 15.96$ $1,848 $93 6.9% $1.02 $1.16 $1.22 $0.67 $0.71 $0.75 US $1,349

Maximum 9,096$ 709$ 10.8% $2.41 $2.21 $2.23 $0.88 $0.94 $0.96 $6,55775th Percentile 5,924 383 9.5% $1.63 $1.88 $1.96 $0.83 $0.88 $0.90 $4,696Median 4,732$ 242$ 8.2% $1.07 $1.22 $1.29 $0.67 $0.73 $0.78 $3,05725th Percentile 2,988 231 7.6% $1.02 $1.16 $1.22 $0.66 $0.71 $0.75 $2,552Minimum 1,848 93 6.9% $0.85 $1.05 $1.01 $0.63 $0.66 $0.66 $1,349

ALEXANDER'S INC ALX $310 $2,380 $110 14.8% $21.07 $16.32 $17.42 $137.00 N/A N/A US -‐ N EAST $747

Valuation Statistics Net Cap Rate Equity Value / Equity Value / GrossShare Equity Operating Implied by Funds from Operations(4) Adjusted Funds from Operations(5) RE Operating

Company Name Ticker Price Value(1) Income(2) Stock Price(7) TTM 2013E 2014E TTM 2013E 2014E Assets(6)CBL & ASSOCIATES PROPERTIES CBL 23.98 $9,096 $709 10.8% 9.59 x 10.85 x 10.75 x 7.96 x 25.62 x 24.88 x $6,557PENN REAL ESTATE INVEST TST PEI 20.85 $2,988 $242 9.5% 11.97 x 11.09 x 10.64 x 9.14 x 28.68 x 26.63 x $2,552EQUITY ONE INC EQY 24.13 $4,732 $231 7.6% 26.93 x 19.78 x 18.71 x 17.15 x 27.42 x 26.93 x $3,057RETAIL PROPERTIES OF AME -‐ A RPAI 14.86 $5,924 $383 8.2% 14.65 x 14.15 x 14.71 x 13.10 x 22.52 x 22.52 x $4,696RAMCO-‐GERSHENSON PROPERTIES RPT 15.96 $1,848 $93 6.9% 15.70 x 13.76 x 13.08 x 12.59 x 22.38 x 21.42 x $1,349

Maximum 9,096$ 709$ 10.8% 26.9 x 19.8 x 18.7 x 17.2 x 28.7 x 26.9 x $6,55775th Percentile 6,717 464 9.8% 17.7 x 15.6 x 15.7 x 14.1 x 27.7 x 26.7 x $4,696Median 5,328$ 312$ 8.8% 13.3 x 12.6 x 12.7 x 11.1 x 26.5 x 25.8 x $3,05725th Percentile 4,296 239 8.0% 11.4 x 11.0 x 10.7 x 8.8 x 24.8 x 24.3 x $2,552Minimum 2,988 231 7.6% 9.6 x 10.9 x 10.6 x 8.0 x 22.5 x 22.5 x $1,349

ALEXANDER'S INC ALX 309.70$ 2,380$ 110$ 6.9% 16.7 x 19.0 x 17.8 x 18.9 x 19.5 x 19.5 x $747

Rela4ve Value of Toys R Us

Comparable Companies -‐ US-‐Based Toy & Board Game Retailers($ in Millions)

Operating Statistics Capitalization ProjectedShare Diluted Equity Preferred Minority Other Enterprise Revenue EBITDA EPS Revenue EBITDA Margin

Company Name Price Shares Value Cash Debt Stock Interest Liabilities Value 2009 2010E 2009 2010E 2009 2010E Growth 2009 2010EBuild A Bear 8.17$ 2,438,478 142$ 14$ -‐$ -‐$ -‐$ 109$ 128$ 389$ 386$ 12$ 24$ (0.11)$ 0.03$ (3.4%) 1.8% 6.2%

Toys R US N/A 49 534$ $1,118 $5,329 $0 $49 $3,058 8,921$ $13,543 13,164$ $963 $786 $5.11 (1.25)$ (2.6%) 2.9% 6.0%

Valuation Statistics Capitalization Enterprise Value / Enterprise Value / Share Equity Enterprise Revenue EBITDA P / E Multiple

Company Name Price Value Value 2009 2010E 2009 2010E 2009 2010EBuild A Bear 8.17$ 142$ 128$ 0.1 x 0.3 x 3.2 x 10.7 x 326.8 x 45.4 x

Toys R US N/A 534$ 8,921$ 0.7 x 0.7 x 9.3 x 11.3 x 2.1 x -‐8.7 x

LEXINGTON REALTY TRUST EQUITY INTEREST RELATIVE VALUATION

Operating Statistics Net TTM GrossShare Equity Operating Book Funds from Operations Per Share AFFO Per Share RE Operating

Company Name Ticker Price Value Income Cap Rate TTM 2013E 2014E TTM 2013E 2014E Geographies Assets(6)CORPORATE OFFICE PROPERTIES OFC 28.70$ $4,650 $285 8.6% $2.41 $1.76 $1.91 $0.83 $1.91 $1.62 US $3,332H&R REAL ESTATE INV-‐REIT UTS HR-‐U CN 20.67$ $9,122 $551 5.7% $1.63 $1.65 $1.69 $0.63 $1.69 $1.50 US $9,686PARKWAY PROPERTIES INC PKY 19.00$ $2,449 $127 7.4% $0.85 $0.88 $1.44 $0.88 $1.44 $1.07 US $1,718COUSINS PROPERTIES INC CUZ 10.80$ $1,475 $87 9.0% $1.07 $0.52 $0.66 $0.66 $0.66 $0.47 US $968

Maximum 9,122$ 551$ 9.0% $2.41 $1.76 $1.91 $0.88 $1.91 $1.62 $9,68675th Percentile 5,768 352 8.7% $1.83 $1.68 $1.75 $0.84 $1.75 $1.53 $4,921Median 3,550$ 206$ 8.0% $1.35 $1.27 $1.57 $0.75 $1.57 $1.29 $2,52525th Percentile 2,206 117 7.0% $1.02 $0.79 $1.25 $0.65 $1.25 $0.92 $1,531Minimum 1,475 87 5.7% $0.85 $0.52 $0.66 $0.63 $0.66 $0.47 $968

LEXINGTON REALTY TRUST LXP $12.91 $4,378 $281 8.5% $21.07 $1.00 $1.11 $137.00 $0.89 $0.96 US -‐ N EAST $3,304

Valuation Statistics Net Cap Rate Equity Value / Equity Value / GrossShare Equity Operating Implied by Funds from Operations(4) Adjusted Funds from Operations(5) RE Operating

Company Name Ticker Price Value(1) Income(2) Stock Price(7) TTM 2013E 2014E TTM 2013E 2014E Assets(6)CORPORATE OFFICE PROPERTIES OFC 28.7 $4,650 $285 8.6% 9.59 x 16.31 x 15.03 x 7.96 x 15.03 x 17.72 x $3,332H&R REAL ESTATE INV-‐REIT UTS HR-‐U CN 20.67 $9,122 $551 5.7% 11.97 x 12.53 x 12.23 x 9.14 x 12.23 x 13.78 x $9,686PARKWAY PROPERTIES INC PKY 19 $2,449 $127 7.4% 26.93 x 21.59 x 13.19 x 17.15 x 13.19 x 17.76 x $1,718COUSINS PROPERTIES INC CUZ 10.8 $1,475 $87 9.0% 14.65 x 20.77 x 16.36 x 13.10 x 16.36 x 22.98 x $968

Maximum 9,122$ 551$ 9.0% 26.9 x 21.6 x 16.4 x 17.2 x 16.4 x 23.0 x $9,68675th Percentile 5,768 352 8.7% 17.7 x 21.0 x 15.4 x 14.1 x 15.4 x 19.1 x $4,921Median 3,550$ 206$ 8.0% 13.3 x 18.5 x 14.1 x 11.1 x 14.1 x 17.7 x $2,52525th Percentile 2,206 117 7.0% 11.4 x 15.4 x 13.0 x 8.8 x 13.0 x 16.7 x $1,531Minimum 1,475 87 5.7% 9.6 x 12.5 x 12.2 x 8.0 x 12.2 x 13.8 x $968

LEXINGTON REALTY TRUST LXP 12.91$ 4,378$ 281$ 6.9% 8.5 x 19.0 x 17.8 x 11.4 x 19.5 x 19.5 x $747

VORN

ADO DIVIDEN

D DISCOUNT M

ODEL VALU

ATION

Vornado Realty Trust -‐ Funds from Operations and Dividend Projections DDM Assumptions & Share Price Calculations12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017

Revenue: 2,645$ 2,767$ 2,901$ 3,047$ 3,206$ Use Multiples Method? YesNet Operating Income: 1,897 1,975 2,061 2,156 2,259 Discount Rate: 7.8%Net Income to Common: 90 455 430 433 431 Baseline Terminal FFO Multiple: 18.0 xPlus: Total Depreciation: 845 814 854 899 951 Baseline Terminal FFO Growth Rate: 5.0%Plus: Distributable to Noncontrolling Int.: (35) (35) (35) (35) (35) Less: Gain on Sale of Eq. Interests' Depr. RE: (8) (8) (8) (8) (8) Terminal Value: 22,407 Less: Gain on Sale of Depreciated RE: 273 (95) (95) (95) (95)

Present Value of Terminal Value: 15,392 Funds from Operations (FFO): 1,166 1,132 1,147 1,195 1,245 Sum of PV of Dividends: 3,424

Implied Equity Value: 18,816$ Dividend Payout Ratio: 70.0% 70.0% 70.0% 70.0% 70.0%

Diluted Shares Outstanding: 187.8 Dividends Issued: 816$ 793$ 803$ 837$ 871$ Implied Share Price: 100.18$ Present Value of Dividends: 786$ 708$ 665$ 643$ 621$ ExerciseNormal Discount Period: 1.000 2.000 3.000 4.000 5.000 Options -‐ A: 3.360 ## 0.822 Mid-‐Year Discount: 0.500 1.500 2.500 3.500 4.500 Options -‐ B: -‐ # -‐ RSU: -‐ -‐

Dividend Growth Rate: 5.5% (2.9%) 1.3% 4.2% 4.1%

Vornado Realty Trust -‐ Net Present Value Sensitivity -‐ Terminal FFO MultiplesDiscount Rate

100.18$ 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0%18.0 x 95.30$ 91.46$ 87.82$ 84.36$ 81.08$ 77.97$ 75.01$ 17.0 x 90.99 87.34 83.88 80.60 77.48 74.52 71.71 16.0 x 86.68 83.23 79.95 76.84 73.89 71.08 68.42 15.0 x 82.37 79.11 76.02 73.08 70.29 67.64 65.12 14.0 x 78.07 75.00 72.08 69.32 66.69 64.20 61.82 13.0 x 73.76 70.88 68.15 65.56 63.10 60.75 58.53

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Vornado Realty Trust -‐ Free Cash Flow to Equity Projections DCF Assumptions & Share Price Calculations12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017

Cash Flow from Operations: 546$ 927$ 934$ 975$ 1,017$ Discount Rate: 7.8%Cash Flow from Investing: 1,464 (574) (609) (648) (689) Baseline Terminal Growth Rate: 5.0%

Issuance of Common Stock: 21 21 21 21 21 Terminal Value: 46,537 Preferred Issuances / (Redemptions): 60 60 60 60 60 Preferred Dividends: (68) (68) (68) (68) (68) Present Value of Terminal Value: 33,190 Payment of Deferred Financing Fees: (34) (34) (34) (34) (34) Sum of PV of FCFE: 6,955 Redemption of Minority Units for Cash: -‐ -‐ -‐ -‐ -‐ Implied Equity Value: 40,145$ Changes to Held for Sale RE Liabilities: -‐ -‐ -‐ -‐ -‐ Distributions to DownREIT Unitholders: (92) (92) (92) (92) (92) Diluted Shares Outstanding: 187.8 Distributions to JV & Profit-‐Share Partners: 174 174 174 174 174 Implied Share Price: 213.74$

ExerciseRevolver Borrowings: -‐ -‐ -‐ -‐ -‐ Type: Number: Price: Dilution:Mortgage Issuance / Constr. Loan Draws: 713 1,013 646 791 817 Options -‐ A: 3.360 67.16 0.822 Issuance of Unsecured Notes: 415 415 415 415 415 Options -‐ B: -‐ -‐ -‐

RSU: -‐ -‐ Total Mandatory Debt Repayments: (87) (227) (780) (199) (380)

Free Cash Flow to Equity (FCFE): 3,112$ 1,617$ 668$ 1,396$ 1,241$ Present Value of FCFE: 2,998$ 1,445$ 554$ 1,074$ 885$

Normal Discount Period: 1.000 2.000 3.000 4.000 5.000Mid-‐Year Discount: 0.500 1.500 2.500 3.500 4.500

Free Cash Flow to Equity (FCFE) Growth Rate: N/A (48.0%) (58.7%) 109.0% (11.1%)

Vornado Realty Trust -‐ Net Present Value Sensitivity -‐ Terminal FCFE Growth RatesDiscount Rate

213.74$ 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0%8.0% 520.49$ 268.05$ 183.84$ 141.70$ 116.38$ 99.47$ 87.37$ 7.0% 276.15 189.16 145.63 119.48 102.02 89.53 80.14 6.0% 194.70 149.72 122.70 104.67 91.76 82.07 74.51 5.0% 153.98 126.05 107.42 94.09 84.07 76.27 70.01 4.0% 129.54 110.28 96.50 86.15 78.09 71.63 66.33 3.0% 113.25 99.01 88.31 79.98 73.30 67.83 63.26

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Vornado Realty Trust -‐ Summary of Financial Statements($ in Millions Except Per Share Data)

Historical ProjectedDecember 31, 2010 2011 2012 2013 2014 2015 2016 2017

Total Revenue: 2,558$ 2,733$ 2,766$ 2,645$ 2,767$ 2,901$ 3,047$ 3,206$ Revenue Growth: (3.7%) 6.8% 1.2% (4.4%) 4.6% 4.8% 5.0% 5.2%

Net Operating Income: 1,575 1,737 1,745 1,897 1,975 2,061 2,156 2,259 Net Operating Income Margin: 61.6% 63.6% 63.1% 71.7% 71.4% 71.0% 70.7% 70.5%

Net Income to Common: 597 601 549 90 455 430 433 431 Earnings Per Diluted Share: 3.24$ 3.23$ 2.94$ 0.48$ 2.44$ 2.30$ 2.32$ 2.31$

FFO Per Diluted Share: 6.61$ 6.47$ 4.39$ 6.25$ 6.07$ 6.15$ 6.41$ 6.67$ AFFO Per Diluted Share: 5.47$ 5.24$ 2.99$ 4.79$ 4.57$ 4.61$ 4.84$ 5.06$

Funds from Operations: 1,218 1,204 818 1,166 1,132 1,147 1,195 1,245 Adjusted Funds from Operations: 1,007 975 558 893 853 861 903 945 Dividends Issued: 530 570 773 816 793 803 837 871

Total Gross RE Operating Assets: 17,387 16,704 18,495 16,637 17,419 18,324 19,357 20,520 Total Real Estate Assets, Net: 15,093 14,060 16,250 13,882 13,699 13,598 13,579 13,640 Total Assets: 20,517 20,453 21,965 21,051 21,932 21,950 22,757 23,467

Total Debt + Preferred: 11,672 11,099 12,582 11,256 12,518 12,860 13,927 14,838 Cash & Cash-‐Equivalents: 691 607 960 2,072 2,877 2,724 3,265 3,615

Vornado Realty Trust -‐ Valuation Multiples

Historical ProjectedDecember 31, 2010 2011 2012 2013 2014 2015 2016 2017

Equity Value / FFO: 20.4 x 14.3 x 14.7 x 14.6 x 14.0 x 13.4 xEquity Value / AFFO: 29.9 x 18.7 x 19.6 x 19.4 x 18.5 x 17.7 x

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Range of Valuation Multiples / Premiums Vornado Realty Trust -‐ Implied Per Share Value Range

25th 75th Applicable 25th 75thMinimum Pecentile Median Pecentile Maximum Company Minimum Pecentile Median Pecentile Maximum

Methodology Name Multiple Multiple Multiple Multiple Multiple Figure Multiple Multiple Multiple Multiple MultiplePublic Company Comparables:TTM FFO: 11.1 x 16.3 x 18.5 x 19.3 x 20.3 x 818$ 48.15$ 70.88$ 80.51$ 84.01$ 88.37$ 12/31/2013 FFO: 13.9 x 17.0 x 18.1 x 18.8 x 20.6 x 1,166 86.46 105.51 112.34 116.53 127.65 12/31/2014 FFO: 11.9 x 15.0 x 16.2 x 16.9 x 18.7 x 1,132 71.63 90.71 97.51 101.70 112.93 TTM AFFO: 12.3 x 19.1 x 22.9 x 24.6 x 25.2 x 558 36.70 56.72 67.96 73.12 74.89 12/31/2013 AFFO: 15.1 x 19.7 x 22.6 x 24.9 x 27.5 x 893 71.69 93.63 107.63 118.41 130.69 12/31/2014 AFFO: 15.0 x 17.3 x 20.8 x 23.9 x 24.9 x 853 68.32 78.35 94.35 108.48 112.92 TTM Implied Cap Rate: 6.0% 4.9% 4.2% 3.9% 3.8% 1,745 108.66 141.02 172.21 193.49 196.24

Precedent Transactions:TTM Implied Cap Rate: 8.3% 7.7% 6.2% 5.4% 5.1% 1,745 65.41 72.74 103.58 124.40 135.30 Discounted Cash Flow Analysis:10-‐14% Discount, 3-‐7% Terminal FCFE Growth Rate: 67.83 78.09 94.09 122.70 189.16 Net Asset Value Analysis:5% -‐ 7% Cap Rate: 90.28 100.60 112.63 126.86 143.93

Valuation Statistics -‐ Vornado Realty Trust

$0.00 $50.00 $100.00 $150.00 $200.00 $250.00

5% -‐ 7% Cap Rate:

10-‐14% Discount, 3-‐7% Terminal FCFE Growth Rate:

TTM Implied Cap Rate:

TTM Implied Cap Rate:

12/31/2014 AFFO:

12/31/2013 AFFO:

TTM AFFO:

12/31/2014 FFO:

12/31/2013 FFO:

TTM FFO:

Min to 25th

25th to Median

Median to 75th

75th to Max


Precedent Transactions

Discounted Cash Flow Analysis

Net Asset Value




Net Asset Value




Net Asset Value




Net Asset Value

Documents

Vornado Retail Portfolio Spinoff