MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS VORNADO REALTY TRUST 39 (iv) repayments of borrowings of $752,422,000, (v) redemption of perpetual preferred shares and units of $103,243,000, par- tially offset by proceeds from (vi) borrowings of $812,487,000, of which $198,500,000 was from the issuance of the Company’s senior unsecured notes due 2010, and (vii) the exercise of employee share options of $145,152,000. Below are the details of capital expenditures, leasing commissions and development and redevelopment expenditures and a reconciliation of total expenditures on an accrual basis to the cash expended in the year ended December 31, 2003. See page 5 for per square foot data. Recurring—capital improvements expended to maintain a property’s competitive position within the market and tenant improvements and leasing commissions for costs to r e-lease expiring leases or renew or extend existing leases. Non-recurring—capital improvements completed in the year of acquisition and the following two years which were planned at the time of acquisition and tenant improvements and leasing commissions for space which was vacant at the time of acquisition of a property. Development and redevelopment expenditures include all har d and soft costs associated with the development or redevelop- ment of a property, including tenant improvements, leasing commissions and capitalized interest and operating costs until the property is substantially complete and ready for its intended use. New York Merchandise (AMOUNTS IN THOUSANDS) T otal Office CESCR Retail Mart Other Capital Expenditures (Accrual basis): Expenditures to maintain the assets: Recurring $ 31,421 $ 14,201 $ 6,125 $ 592 $10,071 $ 432 Non-recurring 13,829 — 4,907 — 8,922 — 45,250 14,201 11,032 592 18,993 432 Tenant improvements: Recurring 67,436 23,415 23,850 3,360 16,811 — Non-recurring 7,150 — 7,150 — — — 74,586 23,415 31,000 3,360 16,811 — Leasing Commissions: Recurring 19,931 10,453 6,054 273 3,151 — Non-recurring 1,496 — 1,496 — — — 21,427 10,453 7,550 273 3,151 — Total Capital Expenditures and Leasing Commissions (accrual basis): Recurring 118,788 48,069 36,029 4,225 30,033 432 Nonrecurring 22,475 — 13,553 — 8,922 — Total 141,263 48,069 49,582 4,225 38,955 432 Adjustments to reconcile accrual basis to cash basis: Expenditures in the current year  applicable to prior periods 47,174 10,061 17,886 11,539 7,688 — Expenditures to be made in future  periods for the current period (56,465) (21,172) (26,950) (1,830) (6,513) — Total Capital Expenditures and Leasing  Commissions (Cash basis) $ 131,972 $ 36,958 $ 40,518 $ 13,934 $ 40,130 $ 432 Development and Redevelopment: Expenditures:  400 North LaSalle 42,433 — — — — 42,433 640 Fifth Avenue 29,138 29,138 — — — — 4 Union Square South 14,009 — — 14,009 — — Crystal Drive Retail 12,495 — 12,495 — — — Other 25,361 5,988 — 18,851 143 379 $ 123,436 $ 35,126 $ 12,495 $ 32,860 $ 143 $ 42,812 Capital expenditures are categorized as follows: