VORNADO REALTY TRUST 58 NOTES TO CONSOLIDATED FINANCIAL STA TEMENTS the Company has variable interests in certain other entities which ar e primarily financing arrangements. The Company has evaluated these entities in accordance with FIN 46R and has determined that they are not VIEs. Based on the Company’s evaluations, it does not believe that the adoption of FIN 46R will have a material effect on its consolidated financial statements. SFAS NO. 150—ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY In May 2003, the FASB issued SFAS No. 150 which establishes standar ds for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. The adoption of SFAS No. 150 on July 1, 2003 caused the Company to reclassify all of its Series F-1 Preferred Units ($10 million liquidation value) from minority interest to a liability on its consolidated balance sheet, as those units may be settled by the issuance  of a variable number of the Company’s common shares. In connection therewith, the Company also reclassified $225,000 of payments made to the holders of these units in the three months ended December 31, 2003 as interest expense.  On November 7, 2003, the FASB deferred, indefinitely the application of paragraphs 9 and 10 of SFAS No. 150 as it relates to mandatory redeemable non-controlling interests in consolidated subsidiaries in order to address a number of interpretation and implementation issues. The Company has determined that one of its consolidated, finite-life joint ventures qualifies as a mandatory redeemable non-controlling interest. If the Company were r equired to adopt the provisions of paragraphs 9 and 10 as currently written, the Company would have to reclassify as a liability , amounts included in minority interest of approximately $1.6 million and record the minority partner’s interest as a liability at its estimated settlement value which would result in a cumulative effect of change in accounting principle of approximately $15.6 million. This liability would be required to be reviewed each quarter and any changes in its settlement value would be recor ded as interest expense. The Company completed approximately $530,400,000 of real in 2002. These acquisitions were consummated through subsidiaries or preferred stock affiliates of the Company. Related net assets and results of operations have been included in these financial statements since their respective dates of acquisition. The pro forma effect of the individual acquisitions and in the aggregate other than Charles E. Smith Commercial Realty, were not material to the Company’s historical results of operations. Acquisitions of individual properties are recorded as acquisitions of r eal estate assets. Acquisitions of businesses are accounted  for under the purchase method of accounting. The purchase price for pr operty acquisitions and businesses acquired is allocated to acquired assets and assumed liabilities using their relative fair values as of the acquisition date based on valuations and other studies. Initial valuations ar subject to change until such information is finalized no later than 12 months from the acquisition date. On January 1, 2002, the Company completed the combination of CESCR with Vornado. Prior to the combination, Vornado owned a 34% interest in CESCR. The consideration for the remaining 66% of CESCR was approximately $1,600,000,000, consisting of 15.6 million newly issued Operating Partnership units and approximately $1 billion of debt (66% of CESCR’s total debt). The purchase price paid by the Company was determined based on the weighted average closing price of the equity issued to CESCR unit holders for the period beginning two business days before and ending two business days after the date the acquisition was agreed to and announced on October 19, 2001. The Company also capitalized approximately $32,000,000 of acquisition related costs, including advisory, legal and other pr ofessional fees that were incurred in connection with the acquisition. The following table summarizes the estimated fair value of assets acquired and liabilities assumed at January 1, 2002, the date of acquisition.  CHARLES E. SMITH COMMERCIAL REALTY INVESTMENT (“CESCR”) ACQUISITIONS: 3.  Acquisitions and Dispositions