14 VORNADO REALTY TRUST MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results Of Operations Years Ended December 31, 2003 and December 31, 2002 Revenues (1) Average occupancy and REVPAR for the Hotel Pennsylvania were 64% and $58 for the year ended December 31, 2003 compared to 65% and $58 for the prior year. (2) Reflects an increase of $2,841 resulting from the rescheduling of two trade shows from the fourth quarter of 2002, in which they were previously held to the first quarter of 2003, and $1,400 relates to a new show held for the first time in 2003, partially offset by lower trade show revenue in 2003 primarily due to a smaller April Market show as a result of a conversion of trade show space to permanent space. See Leasing Activity on page 5 for further details and corresponding changes in occupancy. The Company’s revenues, which consist of property rentals, tenant expense reimbursements, hotel revenues, trade shows  revenues, amortization of acquired below market leases net of above market leases pursuant to SFAS No. 141 and 142, and fee income, were $1,503,055,000 for the year ended December 31, 2003, compared to $1,392,239,000 in the prior year, an increase of $110,816,000. Below are the details of the increase by segment: Date of Merchandise (AMOUNTS IN THOUSANDS) Acquisition T otal Office Retail Mart Other Rentals: Acquisitions: Las Catalinas (acquisition of remaining 50% and consolidation  vs. equity method  accounting for 50%) September 2002 $ 8,546 $ — $ 8,546 $ — $ — Crystal Gateway One July 2002 5,851 5,851 — — — 435 Seventh Avenue (placed in service) August 2002 4,528 — 4,528 — — 2101 L Street August 2003 4,958 4,958 — — — Bergen Mall December 2003 602 — 602 — — 424 Sixth Avenue July 2002 557 — 557 — — (Decrease) increase in amortization  of acquired below market  leases, net (3,587) (4,462) 875 — — Operations: Hotel activity 73 (1) — — — 73 (1) Trade Show activity 3,807 (2) — — 3,807 (2) — Leasing activity 25,952 15,854 (3) 5,210 (4) 5,799 (5) (911) Total increase (decrease)  in rentals 51,287 22,201 20,318 9,606 (838) Tenant expense reimbursements: Acquisitions 4,290 238 4,052 — — Operations 20,158 17,168 (6) 1,840 1,648 (498) Total increase (decrease) in tenant  expense reimbursements 24,448 17,406 5,892 1,648 (498) Fee and other income: Acquisitions: BMS tenant cleaning fees 28,968 28,968 — — — Kaempfer management and  leasing fees 2,441 2,441 — — — Increase (decrease) in: Lease cancellation fee income 4,429 514 2,056 1,859 — Management and leasing fees (3,844) (3,667) (7) (160) (17) — Other 3,087 (15) 2,466 726 (90) Total increase (decrease) in fee and other income 35,081 28,241 4,362 2,568 (90) Total increase (decrease) in revenues $ 110,816 $67,848 $30,572 $13,822 $(1,426)