VORNADO REALTY TRUST 30 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For The Three Months Ended December 31, 2002 Temperature Merchandise Controlled (AMOUNTS IN THOUSANDS) Total Of fice Retail Mart Logistics Other (3) Property rentals $ 283,674 $ 188,381 $ 31,501 $48,909 $ — $ 14,883 Straight-line rents: Contractual rent increases 7,794 7,723 1,017 (1,066) — 120 Amortization of free rent 3,488 1,330 1,869 289 — — Amortization of acquired below market leases, net 12,634 12,469 165 — — — Total rentals 307,590 209,903 34,552 48,132 — 15,003 Expense reimbursements 40,489 20,615 14,483 4,797 — 594 Fee and other income: Tenant cleaning fees — — — — — — Management and leasing fees 4,110 3,676 427 7 — — Other 3,755 2,935 158 636 — 26 Total revenues 355,944 237,129 49,620 53,572 — 15,623 Operating expenses 136,914 85,862 18,640 22,487 — 9,925 Depreciation and amortization 52,917 38,800 4,601 6,028 — 3,488 General and administrative 26,253 7,799 1,880 5,084 — 11,490 Costs of acquisitions and development not consummated 6,874 — — — — 6,874 Amortization of officers deferred  compensation expenses 6,875 — — — — 6,875 Total expenses 229,833 132,461 25,121 33,599 — 38,652 Operating income 126,111 104,668 24,499 19,973 — (23,029) Income applicable to Alexander’s 7,044 — — — — 7,044 Income from partially-owned entities 14,154 92 116 (277) 3,920 10,303 Interest and other investment income 5,701 1,401 78 82 — 4,140 Interest and debt expense (59,141) (35,558) (15,325) (4,562) — (3,696) Net loss on disposition of wholly-owned and  partially-owned assets other than real estate (18,524) — — — — (18,524) Minority interest (32,125) (953) — (1,273) — (29,899) Income before discontinued operations 43,220 69,650 9,368 13,943 3,920 (53,661) Discontinued operations 2,765 4,391 17 — — (1,643) Net income 45,985 74,041 9,385 13,943 3,920 (55,304) Interest and debt expense (2) 77,387 36,064 15,325 5,075 6,223 14,700 Depreciation and amortization (2) 69,188 41,270 5,201 6,318 8,832 7,567 EBITDA (1) $192,560 $ 151,375 $29,911 $ 25,336 $18,975 $ (33,037) (1) EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies. (2) Interest and debt expense and depreciation and amortization included in the reconciliation of net income to EBITDA reflects amounts which are netted in income from partially-owned entities. (3) Other EBITDA is comprised of: (AMOUNTS IN THOUSANDS) 2003 2002 Newkirk Joint Ventures (30% interest): Equity in income of limited partnerships $ 15,119 $ 14,827 Interest and other income 2,311 2,124 Alexander’s (33.1% interest) 6,058 9,096 Hotel Pennsylvania 4,023 3,057 Palisades 1,697 1,346 Industrial warehouses 1,365 1,618 Student Housing 494 547 400 North LaSalle (phased into service beginning October 2003) (680) — 30,387 32,615 Minority interest expense (67,128) (29,814) Corporate general and administrative expenses (16,595) (9,726) Investment income and other 7,054 3,494 Gains on sale of marketable securities 2,950 — Primestone impairment loss — (15,857) Officer’s deferred compensation — (6,875) Write-off of 20 Times Square pre-development costs — (6,874) $ (43,332) $ (33,037)