MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS VORNADO REALTY TRUST 23 Years Ended December 31, 2002 and December 31, 2001 Revenues The Company’s revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows  revenues, amortization of above and below market leases acquired under SFAS No. 141 and 142, and other income, were $1,392,239,000 for the year ended December 31, 2002, compared to $952,161,000 in the year ended December 31, 2001, an increase of $440,078,000 of which $423,128,000 resulted fr om the acquisition of the remaining 66% of CESCR and the  resulting consolidation of its operations. Below ar the details of the increase (decrease) by segment: See Leasing Activity on page 6, for further details and corr esponding changes in occupancy. (2) Reflects a decrease of $3,580 resulting from the rescheduling of two trade shows from the fourth quarter in which they were  previously held to the first quarter of 2003. (1) Average occupancy and REVPAR for the Hotel Pennsylvania were 65% and $58 for the year ended December 31, 2002 compared to 63% and $70 for the prior year. Date of Merchandise (AMOUNTS IN THOUSANDS) Acquisition Total Office Retail Mart Other Rentals: Acquisitions, dispositions and  non-same store revenue: CESCR (acquisition of  remaining 66% and  consolidation vs. equity  method accounting  for 34%) January 2002 $ 393,506 $393,506 $ — $ — $ — 715 Lexington Avenue July 2001 976 — 976 — — Las Catalinas (acquisition of  remaining 50% and  consolidation vs. equity  method accounting for 50%) September 2002 3,108 — 3,108 — — 435 Seventh Avenue (placed in  service) August 2002 2,541 — 2,541 — — 424 Sixth Avenue July 2002 320 — 320 — — Properties taken out of service  for redevelopment (767) — (767) — — Operations: Hotel activity (7,645) (1) — — — (7,645) (1) Trade Show activity (3,908) (2) — — (3,908) (2) — Leasing activity 8,535 8,058 680 314 (517) Total increase (decrease) in  property rentals 396,666 401,564 6,858 (3,594) (8,162) Tenant expense reimbursements: Increase due to acquisitions 15,319 14,398 921 — — Operations 10,434 6,925 1,379 953 1,177 Total increase in tenant expense reimbursements 25,753 21,323 2,300 953 1,177 Other Income: Increase due to acquisitions 15,235 15,224 11 — — Operations 2,424 2,624 535 1,452 (2,187) Total increase (decrease) in other income 17,659 17,848 546 1,452 (2,187) Total increase (decrease) in  revenues $ 440,078 $440,735 $ 9,704 $ (1,189) $ (9,172)