NOTES TO CONSOLIDATED FINANCIAL STATEMENTS VORNADO REALTY TRUST 71 Interest Rate Spread as at Balance as at December 31, over December 31, (AMOUNTS IN THOUSANDS) Maturity LIBOR 2003 2003 2002 Notes and Mortgages Payable: Variable Interest: Office: NYC Office: One Penn Plaza (6) 6/04 L+125 2.48% $ 275,000 $ 275,000 770 Broadway (2) 6/06 L+105 2.18% 170,000 83,314 595 Madison Avenue (3) — — — — 70,345 909 Third Avenue (3) 8/06 L+70 1.89% 125,000 105,837 CESCR Office: Tyson Dulles Plaza — — — — 69,507 Commerce Executive III, IV & V (4) 7/05 L+150 2.64% 42,582 53,307 Commerce Executive III, IV & V B (4) 7/05 L+85 1.99% 10,000 — Merchandise Mart: Furniture Plaza — — — — 48,290 33 North Dearborn Street (2) — — — — 18,926 Other: 400 North LaSalle 2/05 L+250 4.75% 3,038 — Total Variable Interest Notes and  Mortgages Payable 2.29% 625,620 724,526 Total Notes and Mortgages Payable 6.42% 3,339,365 3,437,720 Liabilities related to discontinued operations: Palisades construction loan 1/05 L+175 2.91% 120,000 100,000 6.30% $3,459,365 $ 3,537,720 Senior unsecured notes due 2007 at fair value  (Accreted face amount of $499,499 and  $499,355) (5) 06/07 L+77 2.15 % $ 525,279 $ 533,600 Senior unsecured notes due 2010 (7) 12/10 4.77% $ 199,741 $ — Unsecured revolving credit facility (8) 07/06 L+65 — $ — $ — (1) On February 5, 2004, the Company completed a $300,000 refinancing of Tw o Penn Plaza. The loan bears interest at 4.97% and matures in Februar 2011. The Company retained net proceeds of $39,000 after repaying the existing $151,000 loan, $75,000 of the $275,000 mortgage loan on its One Penn Plaza property and the $33,000 mortgage loan on 866 U.N. Plaza.  (2) On June 9, 2003, the Company completed a $170,000 mortgage of its 770 Broadway property. The loan bears interest at LIBOR plus 1.05% is pre-payable after one year without penalty and matures in June 2006 with two-one year extension options. The pro- ceeds of the new loan were used primarily to repay (i) a $18,926 mortgage loan on 33 North Dearborn, (ii) a $69,507 mortgage loan on Tysons Dulles Plaza, and (iii) $40,000 of borrowing under the Company’ s unsecured revolving credit facility. In connection with the closing of the 770 Broadway loan, the Company purchased an interest rate cap, and simultaneously sold an interest rate cap with the same terms. Since these instruments do not reduce the Company’ s net interest rate risk exposure, they do not qualify as hedges and changes in their respective values are charged to earnings. As the significant terms of these arrangements are the same, the effects of a revaluation of these instruments is expected to substantially offset one another. Simultaneously with the com- pletion of the 770 Broadway loan, the Company used cash from its mortgage escrow account to repay $133,659 of the $153,659 of debt previously cross-collateralized by its 770 Broadway and 595 Madison A venue properties. (3) On August 4, 2003, the Company completed a refinancing of its 909 Third A venue mortgage loan. The new $125,000 mortgage loan is for a term of three years and bears interest at LIBOR plus .70% and has two one-year extension options. Simultaneously with the completion of the 909 Third Avenue loan, the Company used cash from its mortgage escrow account to repay the balance of $20,000 of debt previously cross-collateralized by its 770 Broadway and 595 Madison Avenue properties. In connection with the closing of the 909 Third Avenue loan, the Company purchased an interest rate cap and simultaneously sold an interest rate cap with the same terms. Since these instruments do not reduce the Company’ s net interest rate risk exposure, they do not qualify as hedges and changes in their respective values are charged to earnings. As the significant terms of these arrangements are the same, the effects of a revaluation of these instruments is expected to substantially offset one another. (4) On July 31, 2003, the Company replaced the mortgage on the Commerce Executive property with (i) a new $43,000 non-recourse mortgage loan at LIBOR plus 1.50% with a two-year term and one-year extension option and (ii) a $10,000 unsecured loan for three years at LIBOR plus .65% with a one-year extension option. (5) On June 24, 2002, the Company completed an offering of $500,000 aggregate principal amount of 5.625% senior unsecured notes due June 15, 2007. Interest on the notes is payable semi-annually on June 15th and December 15th, commencing December 15, 2002. The notes were priced at 99.856% of their face amount to yield 5.659%. The net proceeds of approximately $496,300 were used to repay the mortgages payable on 350 North Orleans, T wo Park Avenue, the Merchandise Mart and Seven Skyline. On June 27, 2002, the Company entered into interest rate swaps that effectively converted the interest rate on the $500,000 senior unsecured notes due 2007 from a fixed rate of 5.625% to a floating rate of LIBOR plus .7725%, based upon the trailing 3 month LIBOR rate (2.15% if set on December 31, 2002). As a result of the hedge accounting for the interest rate swap on the Company’ senior unsecured debt, the Company recorded a fair value adjustment of $34,245, as of December 31, 2002 which is equal to the fair value of the interest rate swap asset. The fair value of the swap was $25,780 on December 31, 2003. 