VORNADO REALTY TRUST 17 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Income Applicable to Alexander’s Income applicable to Alexander’s (interest income, management, leasing, development and commitment fees, and equity in income) was $15,574,000 for the year ended December 31, 2003, compared to $29,653,000 in the prior year, a decrease of $14,079,000. This decrease resulted primarily from (i) Alexander’s stock appreciation rights compensation expense of which the Company’s share was $14,868,000 in 2003 compared to zero in 2002, partially offset by (ii) Alexander’s gain on the sale of its Third Avenue property of which the Company’s shar was $3,524,000 in 2002, and (iii) income resulting from the com- mencement of the lease with Bloomber (87% of the space) on November 15, 2003 at Alexander’s 731 Lexington Avenue property of which the Company’s share was $1,589,000.  Income from Partially-Owned Entities Below ar the condensed statements of operations of the Company’s unconsolidated subsidiaries as well as the increase (decrease) in income from these partially-owned entities for the years ended December 31, 2003 and 2002: For the year ended:  Partially- Starwood Temperature Owned Ceruzzi Las Newkirk Controlled Monmouth Office Joint Catalinas (AMOUNTS IN THOUSANDS) Total MLP Logistics Mall Buildings Venture Mall Other December 31, 2003: Revenues $ 521,210 $273,500 $119,605 $24,121 $ 99,590 $4,394 Expenses: Operating, general and administrative (75,887) (15,357) (6,905) (10,520) (39,724) (3,381) Depreciation (132,062) (51,777) (56,778) (4,018) (18,491) (998) Interest expense (172,697) (97,944) (41,117) (6,088) (27,548) — Other, net 47,223 43,083 5,710 (3,220) 2,516 (866) Net income (loss) $ 187,787 $151,505 $ 20,515 $ 275 $ 16,343 $ (851) Vornado’s interest 22.6% 60% 50% 15% 80% Equity in net income (loss) $ 51,057 $33,243 (1) $ 12,869 (2) $ 138 (3) $2,426 $ (681) $ 3,062 Interest and other income 10,292 7,002 — 3,290 — — — Fee income 6,552 — 5,547 1,005 — — — Income (loss) from partially-owned  entities $ 67,901 $ 40,245 $ 18,416 $ 4,433 $ 2,426 $ (681) N/A (4) $ 3,062 December 31, 2002: Revenues $ 480,363 $295,369 $117,663 $ 5,760 $50,205 $ 695 $10,671 Expenses: Operating, general and administrative (46,098) (8,490) (7,904) (2,510) (21,827) (2,265) (3,102) Depreciation (106,287) (34,010) (59,328) (943) (9,094) (1,430) (1,482) Interest expense (180,431) (121,219) (42,695) (1,520) (11,354) — (3,643) Other, net (12,505) (9,790) (2,150) 48 389 (200) (802) Net income (loss) $ 135,042 $121,860 $ 5,586 $ 835 $ 8,319 $(3,200) $ 1,642 Vornado’s interest 21.7% 60% 50% 24% 80% 50% Equity in net income (loss) $ 30,664 $ 26,500 $ 4,144 $ 791 (3) $ 1,966 $(2,560) $ 851 $ (1,028) Interest and other income 8,000 8,000 — — — — — — Fee income 5,794 — 5,563 231 — — — — Income (loss) from partially-owned  entities $ 44,458 $ 34,500 $ 9,707 $ 1,022 $ 1,966 $(2,560) $ 851 $ (1,028) Increase (decrease) in income from partially- owned entities $ 23,443 $ 5,745 (1) $ 8,709 (2) $ 3,411 (3) $ 460 $1,879 $ (851) (4) $ 4,090 (1) The increase reflects the Company’ share of the following items from the Newkirk MLP in 2003 including (i) $7,200 of net gains  on the sale of 11 properties, (ii) a gain of $1,600 on the early extinguishment of debt, partially offset by, (iii) a charge of $538 in  connection with a litigation claim, (iv) a charge of $353 for an asset impairment and (v) $930 in Federal and state taxes. (2) The Company reflects its 60% share of Vornado Crescent Portland Partnership’ s (the “Landlord”) rental income it receives from AmeriCold Logistics, its tenant, which leases the underlying temperature controlled warehouses used in its business. The Company’s joint venture does not recognize rental income unless earned and collection is assured or cash is received. The Company did  not recognize $25,087 of rent it was due for the year ended December 31, 2003, which together with previously deferred rent is $49,436. The following summarizes the increase in income for the year ended December 31, 2003 over the prior year: