We like the real estate lending business. From time to time, we provide real estate financing on assets that we understand as well as the assets we own. Mike and I twice declined to buy New York’s General Motors Building for about $800 million, in 1998 and again in 2000. In September 2003, the General Motors Building sold for $1.4 billion to a private New York investor. We bid $1.2 billion. This time around, we participated in the financing of this deal by lending $225 million of mezzanine debt (11) at an average rate of LIBOR plus 8.833% subordi- nate to $900 million of senior debt. (See Note 3 to the Financial Statements for the full details of this investment.) Recently, the borrower began discussions with us about prepaying/recasting a portion of the loan. This year Alexander’s deserves its own section. And this year we intend, in conjunction with Alexander’s Board of Dir ectors, to determine the end game for this investment which may include selling it, or simply leaving it to seek its natural value as a free standing, separately traded REIT, as it now is, or other options.  Vo rnado owns 1,654,000 shares of Alexander’s, Inc., a 33% stake in this NYSE-listed REIT. The shares, which had a value of $65 on January 1, 2003 are trading now at about $150, making Vornado’s equity investment worth $248 million at market (12) which, when taken together with Vo rnado’s $124 million loan to Alexander’s, represents a total investment of $372 million.  Alexander’ s has no corporate level employees. Vornado serves as its for-fee external manager, leasing agent, developer , etc. (11) In real estate, mezzanine debt is that tranche(s) of below investment grade debt which is junior to the secured debt. It is not secured by the real estate, per se, but by pledge of the partnership interests  of the owning entity. (12) Our original cost for these shares is $70 million. VORNADO REALTY TRUST 10 Real Estate Lending Alexander’ s 