Washington Office VORNADO REALTY TRUST 8 Vornado’s Charles E. Smith Division is the largest owner of office space in the Washington, DC area and is the largest landlord to the Federal Government. Vornado made minor- ity investments in Smith in 1997, and then again in 1999, and acquired the remainder on January 1, 2002, so that we now own 100%. Smith today owns 14.0 million square feet, about half of which is located in 26 buildings in Crystal City, Arlington, VA, adjacent to Reagan National Airport, overlooking the Capitol. (8) Mitchell Schear has now completed his first full year as President of Charles E. Smith. He has finished the  integration of Smith and Kaempfer and is fully focused  on leasing—our Washington office team leased 2,848,000 squar e feet in 2003. He and David have become quite a team. Mike and I are delighted. When we acquired Smith our underwriting accounted for the fact that its largest tenant, the Patent and Trademark Of fice (PTO), would be relocating in late 2004 and 2005, vacating approximately 1.9 million square feet in Crystal City . Our underwriting accounted for this both in terms of price (9) —we acquired the portfolio at an above market 10.3% cap rate—and by mentally allocating $75 million for capital expenditures to re-lease these buildings. The table below shows the move-out schedule of PTO. 2004 2005 2006 2007 (IN THOUSANDS OF SQUARE FEET) Total Q4 Q1 Q2 Q3 Q4 Q1 Q4 To be left in service 1,038 247 103 101 188 98 107 194 To be taken out of service 901 690 109 64 — 38 — — Total 1,939 937 212 165 188 136 107 194 (8) Smith also owns 4.8 million square feet inside the Beltway including 2.5 million square feet in the I-395 Corridor (Skyline), 1.5 million square feet in the District of Columbia and .8 million square feet in Rosslyn/Ballston and 1.7  million square feet outside the Beltway in Tysons Corner Reston and Bethesda. (9) Our purchase price for 100% of Smith was $2.45 billion based on a 10.3% cap rate on EBITDA. Same store  EBITDA grew at the rate of 5% per annum to $278.7 million in 2003, which we believe would be valued in the current market at a cap rate in the 7s. But even at an 8% cap rate, we have a mark-to-market profit in this investment of approximately $1 billion. It’s not that simple, however In this acquisition we issued a security convertible into 5.7 million common shares at $44 and issued 15.6 million operating partnership units at $39. In effect, the sellers who took our shares instead of cash participated to the tune of 14% in the increase in value of the Smith assets and the Vornado assets as well.