<PAGE> 1
Exhibit Index on Page 32
As filed with the Securities and Exchange Commission on February 12, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) AUGUST 12, 1998
--------------------------------
Commission File Number: 000-22635
---------------------------------------------------------
VORNADO REALTY L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3925979
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification Number)
PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 587-1000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Page 1
<PAGE> 2
ITEM 1. NOT APPLICABLE
ITEM 2. On August 12, 1998, Vornado Realty Trust ("Vornado") acquired
689 Fifth Avenue, an 84,000 square foot Manhattan office
building, for approximately $33 million. The transaction was
financed with borrowings under the revolving credit facility.
On November 18, 1998, Vornado completed the previously
announced acquisition of certain properties from the Mendik
Real Estate Limited Partnership ("Mendik RELP") (an
unaffiliated entity) in accordance with a previously disclosed
Settlement Agreement between Vornado and certain limited
partners of Mendik RELP. The acquired real estate assets
include (i) the Saxon Woods Corporate Center located in
Harrison, New York, which contains approximately 232,000
square feet, (ii) the remaining 60% interest in an office
building located at Two Park Avenue in Manhattan, which
contains approximately 946,000 square feet (Vornado already
owned the other 40%) and (iii) a leasehold interest in an
office building located at 330 West 34th Street in Manhattan,
which contains approximately 637,000 square feet
(collectively, the "Mendik RELP properties"). The aggregate
purchase price was approximately $106 million, consisting of
$31 million of cash from borrowings under the revolving credit
facility, $29 million of Vornado common shares and $46 million
of assumed debt.
On December 2, 1998, Vornado completed its previously
announced acquisition of the 1.05 million square foot Market
Square Complex of showrooms in High Point, North Carolina. The
consideration was approximately $95 million in the aggregate
consisting of approximately $45 million in debt, $44 million
in a combination of Class A Units of Vornado Realty L.P. (the
"Operating Partnership") and Series C-1 Preferred Operating
Partnership Units and $6 million of cash.
On January 12, 1999, Vornado completed its previously
announced acquisition of the leasehold interest in 888 Seventh
Avenue, a 46 story office building located in midtown
Manhattan which contains approximately 847,000 square feet.
The aggregate purchase price was approximately $100 million,
consisting of $45 million of cash from borrowings under the
revolving credit facility and $55 million of assumed debt.
These transactions were consummated through subsidiaries of
the Operating Partnership, a limited partnership of which
Vornado owns an approximate 88.7% limited partnership interest
at December 22, 1998 and is the sole general partner.
ITEMS 3-6. NOT APPLICABLE
Page 2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
The Consolidated Financial Statements for Mendik Real Estate
Limited Partnership for the Year Ended December 31, 1997
(including the report thereon of KPMG Peat Marwick LLP) and
the nine months ended September 30, 1998 and 1997 are
incorporated herein by reference to the Vornado Form 8-K filed
with the Securities and Exchange Commission on August 12, 1998
and to Exhibit 10.1 of the Vornado Form 8-K filed with the
Securities and Exchange Commission on February 12, 1999,
respectively.
There are filed herewith:
(a) The Statement of Revenues and Certain Expenses for (i) 689
Fifth Avenue, New York, New York, (ii) the Statements of
Income and Expense for Market Square Limited Partnership and
(iii) the Statements of Revenues and Certain Expenses for 888
Seventh Avenue.
(b) The Condensed Consolidated Pro Forma Balance Sheet of the
Operating Partnership as of September 30, 1998 and the
Condensed Consolidated Pro Forma Income Statement of the
Operating Partnership for the nine months ended September 30,
1998 and the year ended December 31, 1997 commencing on page
21, prepared to give pro forma effect to the completed
acquisitions of 689 Fifth Avenue, the Mendik RELP Properties,
the Market Square Complex, 888 Seventh Avenue, and the
previously reported acquisitions and investments reflected in
the Form 8/K-A filed with the Securities and Exchange
Commission on July 15, 1998 for the completed acquisitions of
770 Broadway and the additional interest in 570 Lexington
Avenue and those previously reported acquisitions (Mendik
Company, Arbor Property Trust, 90 Park Avenue, Americold
Corporation and URS Logistics, Inc., The Montehiedra Town
Center, The Riese Transaction, 15% investment in Charles E.
Smith Commercial Realty L.P., 40% investment in the Hotel
Pennsylvania, 640 Fifth Avenue, One Penn Plaza, 150 East 58th
Street and the Merchandise Mart Group of Properties) and the
financings attributable thereto.
Page 3
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
REFERENCE
---------
<S> <C>
689 Fifth Avenue New York, New York
Independent Auditors' Report........................................... 6
Statement of Revenues and Certain Expenses
for the Year Ended December 31, 1997 (audited)
and for the Six Months Ended June 30, 1998
and 1997 (unaudited)................................................... 7
Notes to Statement of Revenues and Certain Expenses.................... 8
Market Square Limited Partnership
Report of Independent Certified Public Accountants..................... 10
Statement of Income and Expense for the Year Ended
December 31, 1997 (audited)............................................ 11
Notes to Financial Statement for the Year Ended
December 31, 1997 (audited)............................................ 12
Accountants' Compilation Report........................................ 14
Statements of Income and Expense for the Nine Months Ended
September 30, 1998 and 1997 (unaudited)................................ 15
888 Seventh Avenue
Independent Auditors' Report........................................... 16
Statements of Revenues and Certain Expenses for the Year
ended December 31, 1997 (audited) and for the Nine Months
Ended September 30, 1998 and 1997 (unaudited).......................... 17
Notes to Statements of Revenues and Certain Expenses................... 18
</TABLE>
Page 4
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
REFERENCE
---------
<S> <C>
Pro Forma financial information:
Condensed Consolidated Pro Forma Balance Sheet at
September 30, 1998.................................................... 21
Condensed Consolidated Pro Forma Unaudited Income
Statement for the Nine Months Ended September 30,
1998.................................................................. 22
Condensed Combining Pro Forma Unaudited Income
Statement for the Periods in 1998 Prior to Acquisition................ 23
Condensed Combining Pro Forma Unaudited Income
Statement for Previously Reported Acquisitions for the
Periods in 1998 Prior to Acquisition.................................. 24
Condensed Consolidated Pro Forma Unaudited Income
Statement for the Year Ended December 31, 1997........................ 25
Condensed Combining Pro Forma Income Statement
for the Year Ended December 31, 1997.................................. 26
Condensed Combining Pro Forma Unaudited Income
Statement for Previously Reported Acquisitions for the
Year Ended December 31, 1997 or the Periods in 1997
Prior to Acquisition.................................................. 27
Notes to Condensed Consolidated Pro Forma Financial
Statements............................................................ 28
</TABLE>
EXHIBIT NO. EXHIBIT
23.1 Consent of Friedman Alpren & Green LLP
23.2 Consent of Sharrard, McGee & Co., P.A.
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of Deloitte & Touche LLP
ITEM 8. NOT APPLICABLE.
Page 5
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
TO THE PARTNERS OF ARDEN-ESQUIRE REALTY COMPANY
We have audited the accompanying statement of revenues and certain
expenses of the property located at 689 Fifth Avenue, New York, New York,
described in Note 1 (the "Property"), for the year ended December 31, 1997. This
financial statement is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission and, as described in Note 1, is not intended to be a
complete presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of the Property for
the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
FRIEDMAN ALPREN & GREEN LLP
July 14, 1998
Page 6
<PAGE> 7
689 FIFTH AVENUE
NEW YORK, NEW YORK
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30, Year Ended
------------------------- December 31,
1998 1997 1997
------ ------ ------------
(Unaudited)
Revenues
<S> <C> <C> <C>
Base rents $1,650 $1,622 $3,289
Escalation charges 7 148 176
Water and sprinkler 4 2 3
Miscellaneous 7 28 52
------ ------ ------
1,668 1,800 3,520
------ ------ ------
Certain expenses
Renting 2 2 7
Administrative 83 51 99
Operating 490 438 802
Real estate taxes 396 384 787
------ ------ ------
971 875 1,695
------ ------ ------
Excess of revenues over
certain expenses $ 697 $ 925 $1,825
====== ====== ======
</TABLE>
The accompanying notes are an integral part of this financial statement.
Page 7
<PAGE> 8
689 FIFTH AVENUE
NEW YORK, NEW YORK
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
1 - ORGANIZATION AND BASIS OF PRESENTATION
The Property is a 15-story office building located at 689 Fifth Avenue
in New York City. It has an aggregate net rentable area of approximately
84,000 square feet (approximately 68% of which is leased at June 30, 1998).
The Property's accounting records are maintained in accordance with
generally accepted accounting principles.
The accompanying financial statement is presented in conformity with
Rule 3-14 of the Securities and Exchange Commission. Accordingly, the
financial statement is not representative of the actual operations for the
periods presented, as certain expenses, which may not be comparable to the
expenses expected to be incurred in the future operations of the acquired
property, have been excluded. Expenses excluded consist of interest,
depreciation and amortization, and certain professional fees not directly
related to the future operations of the Property.
The preparation of the financial statement in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
The statement of revenues and certain expenses for the six months
ended June 30, 1998 and 1997 is unaudited. However, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) necessary for the fair presentation of this statement of
revenues and certain expenses for the interim periods on the basis
described above have been included. The results for such interim periods
are not necessarily indicative of the results for an entire year.
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICY
Revenue Recognition
Rental income is recognized from leases with scheduled rent increases
on a straight-line basis over the lease term. Escalation rents based on
payments for real estate taxes, insurance, utilities and maintenance by
tenants are estimated and accrued.
Page 8
<PAGE> 9
689 FIFTH AVENUE
NEW YORK, NEW YORK
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
3 - OPERATING LEASES
Office and retail space in the Property is rented to tenants under
various operating leases. Approximate minimum future rentals required under
these leases at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31,
------------
<S> <C>
1998 $ 3,200,000
1999 3,191,000
2000 3,256,000
2001 3,350,000
2002 3,392,000
Thereafter 13,426,000
------------
$ 29,815,000
============
</TABLE>
Page 9
<PAGE> 10
[SHARRARD, MCGEE & CO., P.A. LETTERHEAD]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
September 30, 1998
Market Square Limited Partnership
High Point, North Carolina
We have audited the accompanying Statement of Income and Expense of Market
Square Limited Partnership, as described in Note 2, for the year ended December
31, 1997. This Statement is the responsibility of the management of Market
Square Limited Partnership. Our responsibility is to express an opinion on the
Statement of Income and Expense based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Statement of Income and Expense. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
Statement of Income and Expense. We believe our audit provides a reasonable
basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with
the provisions of the Contribution Agreement as described in Note 2 and is not
intended to be a complete presentation of Market Square Limited Partnership's
revenues and expenses.
In our opinion, the Statement of Income and Expense referred to above
present fairly, in all material respects, the Income and Expense as described in
Note 2 of Market Square Limited Partnership for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/ Sharrard, McGee & Co., P.A.
---------------------------------
Sharrard, McGee & Co., P.A.
page 10
<PAGE> 11
MARKET SQUARE LIMITED PARTNERSHIP
STATEMENT OF INCOME AND EXPENSE
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
REVENUES:
Showroom and Office $12,653,115
Hotel and Restaurant 2,471,147
-----------
Total 15,124,262
-----------
COSTS AND EXPENSES (EXCLUDING DEPRECIATION AND INTEREST):
Showroom and Office 4,439,012
Hotel and Restaurant 1,883,831
-----------
Total 6,322,843
-----------
Operating profit 8,801,419
INTEREST EXPENSE 3,760,703
-----------
NET INCOME BEFORE DEPRECIATION 5,040,716
DEPRECIATION 1,393,310
-----------
NET INCOME $ 3,647,406
===========
</TABLE>
See accompanying summary of accounting
policies and notes to financial statements.
Page 11
<PAGE> 12
MARKET SQUARE LIMITED PARTNERSHIP
SUMMARY OF ACCOUNTING POLICIES
ACCOUNTING BASIS
The accompanying Statement of Income and Expense has been prepared on the
accrual method of accounting.
BASIS OF REPORTING
This report does not give effect to any assets that the partners may have
outside their interests in the Partnership nor to any personal obligations,
including income taxes, of the partners. It also does not give effect to any
assets or liabilities of the Partnership that are not part of the Contribution
Agreement.
DEPRECIATION
Depreciation is computed over the estimated useful life of assets using
the straight-line method for financial reporting and accelerated methods for
income tax purposes.
MANAGEMENT ESTIMATES
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
See accompanying summary of accounting
policies and notes to financial statements.
Page 12
<PAGE> 13
MARKET SQUARE LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - OPERATIONS
The Partnership is engaged in showroom rentals, office rentals, hotel
operations and restaurant operations located in High Point, North Carolina.
NOTE 2 - CONTRIBUTION AGREEMENT
The accompanying Statement of Income and Expense has been prepared to
comply with the provisions of the Contribution Agreement between Vornado Realty,
L.P. and Market Square Limited Partnership, dated August 18, 1998. This
Statement includes income and expenses of all properties included in the
Contribution Agreement, and does not include income and expenses of other
properties owned by Market Square Limited Partnership that are not part of the
Contribution Agreement.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Partnership has various transactions with partners and entities that
are controlled by partners in the Partnership. Following is a summary of
transactions and balances with related entities for 1997 that pertain to the
properties included in the Contribution Agreement described in Note 2.
<TABLE>
<S> <C> <C>
Due from related entities $ 3,813
Rental income from related entities $ 417,456
Rent paid related entities $ 22,827
Management fees paid related entities $ 576,319
</TABLE>
NOTE 4 - ADVERTISING
The Partnership expenses advertising costs as incurred. Total advertising
costs were $123,364 in 1997.
See accompanying summary of accounting
policies and notes to financial statements.
Page 13
<PAGE> 14
[SHARRARD, MCGEE & CO., P.A. LETTERHEAD]
ACCOUNTANTS' COMPILATION REPORT
November 12, 1998
Market Square Limited Partnership
High Point, North Carolina
We have compiled the accompanying Statements of Income and Expense of
Market Square Limited Partnership, as described below, for the nine months ended
September 30, 1998 and 1997, in accordance with the Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of statements
information that is the representation of management. We have not audited or
reviewed the accompanying Statements of Income and Expense and, accordingly, do
not express an opinion or any other form of assurance on them.
The accompanying Statements of Income and Expense have been prepared to
comply with the provisions of the Contribution Agreement between Vornado Realty,
L.P. and Market Square Limited Partnership, dated August 18, 1998. The
Statements include income and expenses of all properties included in the
Contribution Agreement, and do not include income and expenses of other
properties owned by Market Square Limited Partnership that are not part of the
Contribution Agreement. The Statements are not intended to be a complete
presentation of Market Square Limited Partnership's income and expenses.
Management has elected to omit substantially all of the disclosures
required by generally accepted accounting principles. If the omitted disclosures
were included in the financial statements, they might influence the user's
conclusions about the Company's income and expenses. Accordingly, these
financial statements are not designed for those who are not informed about such
matters.
/s/ Sharrard, McGee & Co., P.A.
---------------------------------
Sharrard, McGee & Co., P.A.
Page 14
<PAGE> 15
MARKET SQUARE LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND EXPENSE
<TABLE>
<CAPTION>
Nine months ended
September 30,
1998 1997
------------ ------------
<S> <C> <C>
REVENUES:
Showroom and Office $ 8,908,153 $ 8,512,008
Hotel and Restaurant 1,828,677 1,747,248
------------ ------------
Total 10,736,830 10,259,256
------------ ------------
COSTS AND EXPENSES
(EXCLUDING DEPRECIATION AND INTEREST):
Showroom and Office 3,497,183 3,116,251
Hotel and Restaurant 1,437,836 1,332,431
------------ ------------
Total 4,935,019 4,448,682
------------ ------------
Operating profit 5,801,811 5,810,574
INTEREST EXPENSE 2,730,820 2,848,480
------------ ------------
NET INCOME BEFORE DEPRECIATION 3,070,991 2,962,094
DEPRECIATION 1,011 128 1,045 530
------------ ------------
NET INCOME $ 2,059,863 $ 1,916,564
============ ============
</TABLE>
See accountants' compilation report.
Page 15
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Vornado Realty Trust:
We have audited the statement of revenues and certain expenses of 888 7th
Avenue, as described in Note 1 for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on the financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K of Vornado Realty
Trust and Vornado Realty L.P.) as described in Note 1 and is not intended to be
a complete presentation of 888 7th Avenue's revenues and expenses.
In our opinion, such financial statement presents fairly, in all material
respects, the revenues and certain expenses of 888 7th Avenue as described in
Note 1 for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
New York, New York
March 20, 1998
Page 16
<PAGE> 17
888 7TH AVENUE
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
1997 1997 1998
----------- ----------- ------------
(Unaudited)
<S> <C> <C> <C>
REVENUES:
Rental income $18,175,531 $12,887,618 $ 17,248,942
Tenant recoveries 3,343,023 2,584,472 2,558,590
Other income 1,225,912 596,067 865,318
----------- ----------- ------------
Total operating
revenues 22,744,466 16,068,157 20,672,850
----------- ----------- ------------
CERTAIN EXPENSES:
Building operating
expenses 10,944,200 8,289,363 6,915,756
Real estate taxes 3,929,900 2,909,400 2,770,241
Ground lease expense 375,000 281,250 1,297,109
Other expense (income) 572,296 245,775 (191,691)
----------- ----------- ------------
Total certain expenses 15,821,396 11,725,788 10,791,415
----------- ----------- ------------
REVENUES IN EXCESS OF
CERTAIN EXPENSES $ 6,923,070 $ 4,342,369 $ 9,881,435
=========== =========== ============
</TABLE>
See notes to statements of revenues and certain expenses.
Page 17
<PAGE> 18
888 7TH AVENUE
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1. ORGANIZATION AND BASIS OF PRESENTATION
888 7th Avenue (the "Property") is a 46-story office building located on
Seventh Avenue at 56th Street in New York City. The Property has an
aggregate net rentable area of approximately 843,000 square feet
(approximately 95% leased as of September 30, 1998). The accounting
records for the Property are maintained in accordance with generally
accepted accounting principles. The statements of revenues and certain
expenses include information related to the operations of the Property as
recorded by its current owner.
The accompanying historical financial information is presented in
conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statements are not representative of the
actual operations for the periods presented as certain expenses, which
may not be comparable to the expenses expected to be incurred in the
future operations of the acquired property, have been excluded. Expenses
excluded consist of interest, depreciation and amortization and other
costs not directly related to the future operations of the Property.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
The statements of revenues and certain expenses for the nine months ended
September 30, 1997 and 1998 are unaudited, however, in the opinion of
management, all adjustments (consisting solely of normal recurring
adjustments) necessary for the fair presentation of these statements of
revenues and certain expenses for the interim periods, on the basis
described above, have been included. The results of such interim periods
are not necessarily indicative of the results for an entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION - Rental income is recognized from leases with
scheduled rent increases on a straight-line basis over the lease term.
Escalation rents based upon payments for real estate taxes, insurance,
utilities and maintenance by tenants are estimated and accrued.
Page 18
<PAGE> 19
OPERATING LEASES
The Property leases office space to various tenants with lease terms expiring in
various years. The following is a schedule, by years, of the approximate minimum
future rentals required under these operating leases as of December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
1998 $ 19,619,000
1999 18,124,000
2000 17,594,000
2001 16,704,000
2002 16,353,000
Thereafter $ 114,861,000
</TABLE>
GROUND LEASE
The office building is located on land subject to a ground lease which expires
in 2066. The ground lease, which was amended effective May 29, 1998, provided
for annual rent, exclusive of real estate taxes and other expenses, of $375,000
through May 28, 1998. Effective May 29, 1998 annual rent increased to
$3,350,000. The ground lease provides for further increases in rent during 2028
and 2048 based upon increases in the value of the land.
Page 19
<PAGE> 20
PRO FORMA FINANCIAL INFORMATION:
The unaudited condensed consolidated pro forma financial information
attached presents: (A) the Condensed Consolidated Pro Forma Income Statements of
Vornado Realty L.P. (the "Operating Partnership") for the year ended December
31, 1997 and for the nine months ended September 30, 1998, as if the following
had occurred on January 1, 1997 (i) the completed acquisitions of 689 Fifth
Avenue, the Mendik RELP Properties, the Market Square Complex and 888 Seventh
Avenue with the financings attributable thereto and (ii) the previously reported
acquisitions and investments reflected in the Form 8-K/A filed with the
Securities and Exchange Commission on July 15, 1998 for the completed
acquisition of 770 Broadway and the additional interest in 570 Lexington Avenue
and previously reported acquisitions (Mendik Company, 90 Park Avenue, Arbor
Property Trust, Americold Corporation and URS Logistics, Inc., The Montehiedra
Town Center, The Riese Transaction, 15% investment in Charles E. Smith
Commercial Realty L.P., 40% investment in The Hotel Pennsylvania, 640 Fifth
Avenue, One Penn Plaza, 150 East 58th Street and the Merchandise Mart Group
of Properties) and the financings attributable thereto and (B) the Condensed
Consolidated Pro Forma Balance Sheet of the Operating Partnership as of
September 30, 1998, as if all of the above acquisitions had occurred on
September 30, 1998.
The unaudited condensed consolidated pro forma financial information is
not necessarily indicative of what the Operating Partnership's actual results of
operations or financial position would have been had these transactions been
consummated on the dates indicated, nor does it purport to represent the
Operating Partnership's results of operations or financial position for any
future period.
The unaudited condensed consolidated pro forma financial information
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Operating Partnership's Annual Report on Form 10-K
for the year ended December 31, 1997, the Consolidated Financial Statements and
notes thereto included in the Operating Partnership's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998, the Consolidated Financial
Statements and notes thereto included in Mendik RELP's Annual Report on Form
10-K for the year ended December 31, 1997, and the Consolidated Financial
Statements and notes thereto of Mendik RELP's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998. In management's opinion, all adjustments
necessary to reflect these transactions have been made.
Page 20
<PAGE> 21
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
September 30, 1998
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
HISTORICAL
OPERATING PRO FORMA TOTAL
PARTNERSHIP ADJUSTMENTS PRO FORMA
----------- ------------- -----------
<S> <C> <C> <C>
ASSETS:
Real estate, net $ 2,803,795 $ 106,000 (A) $ 3,150,085
94,500 (B)
45,790 (C)
100,000 (D)
Cash and cash equivalents 269,952 (31,000)(A) 263,552
(6,400)(B)
(45,000)(D)
31,000 (E)
45,000 (E)
Investment in partially-owned
entities, including investment in
and advances to Alexander's 840,986 (19,790)(C) 821,196
Mortgage loans receivable 10,625 10,625
Receivable arising from straight-
lining of rents 41,847 41,847
Other assets 160,515 160,515
----------- --------- -----------
$ 4,127,720 $ 320,100 $ 4,447,820
=========== ========= ===========
LIABILITIES:
Notes and mortgages payable $ 1,234,314 $ 46,000 (A) $ 1,405,914
44,600 (B)
26,000 (C)
55,000 (D)
Revolving credit facility 683,250 31,000 (E) 759,250
45,000 (E)
Deferred leasing fee income 9,868 9,868
Officer's deferred compensation
payable 34,664 34,664
Other liabilities 78,948 78,948
----------- --------- -----------
2,041,044 247,600 2,288,644
----------- --------- -----------
Minority interest 12,549 -- 12,549
----------- --------- -----------
PARTNERS' CAPITAL:
Total partners' capital 2,074,127 29,000 (A) 2,146,627
43,500 (B)
----------- --------- -----------
$ 4,127,720 $ 320,100 $ 4,447,820
=========== ========= ===========
</TABLE>
Page 21
<PAGE> 22
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT
For the Nine Months Ended September 30, 1998
(amounts in thousands, except per unit amounts)
<TABLE>
<CAPTION>
HISTORICAL-
HISTORICAL PREVIOUSLY OPERATING CURRENT
OPERATING REPORTED PARTNERSHIP ACQUISITIONS PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 299,924 $ 40,628 $ 340,552 $ 58,080 $ 5,969 (F) $ 403,184
-- -- -- -- (1,417) (G)
Expense reimbursements 53,000 1,955 54,955 2,570 3 57,528
Other income 6,482 1,481 7,963 872 2 8,837
--------- --------- --------- --------- --------- ---------
359,406 44,064 403,470 61,522 4,557 469,549
--------- --------- --------- --------- --------- ---------
EXPENSES:
Operating 144,214 19,582 163,796 32,005 (1,216) (G) 194,585
Depreciation and amortization 41,605 6,049 47,654 1,159 3,848 (H) 52,661
General and administrative 18,792 -- 18,792 506 21 19,319
--------- --------- --------- --------- --------- ---------
204,611 25,631 230,242 33,670 2,653 266,565
--------- --------- --------- --------- --------- ---------
Operating income 154,795 18,433 173,228 27,852 1,904 202,984
Income applicable to Alexander's 806 -- 806 -- -- 806
Income from partially owned entities 20,871 (519) 20,352 -- (1,118) (I) 19,234
Interest and other investment
income 18,067 (786) 17,281 246 -- 17,527
Interest and debt expense (80,536) (17,867) (98,403) (6,888) (10,278) (J) (115,569)
Net gain from insurance settlement
and condemnation proceedings 9,649 -- 9,649 -- -- 9,649
Minority interest (275) -- (275) (2,714) 2,714 (K) (275)
--------- --------- --------- --------- --------- ---------
Net income 123,377 (739) 122,638 18,496 (6,778) 132,356
Preferential allocations (10,492) (1,379) (11,871) -- (2,390) (L) (14,261)
Preferred unit distributions (16,268) -- (16,268) -- -- (16,268)
--------- --------- --------- --------- --------- ---------
Net income applicable to
Class A units $ 96,617 $ (2,118) $ 94,499 $ 18,496 $ (9,168) $ 103,827
========= ========= ========= ========= ========= =========
Net income per Class A unit - basic
(based on 79,407 units and
85,064 units) $ 1.22 $ 1.22
========= =========
Net income per Class A unit - diluted
(based on 81,482 units and
87,139 units) $ 1.19 $ 1.19
========= =========
</TABLE>
Page 22
<PAGE> 23
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT
For the Periods in 1998 Prior to Acquisition
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 NINE MONTHS ENDED SEPTEMBER 30, 1998
---------------- ----------------------------------------- HISTORICAL-
MENDIK MARKET CURRENT
689 FIFTH RELP SQUARE 888 SEVENTH ACQUISITIONS
AVENUE (1) PROPERTIES COMPLEX AVENUE COMBINED
---------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 1,650 $ 28,444 $ 10,737 $17,249 $ 58,080
Expense reimbursements 11 -- -- 2,559 2,570
Other income 7 -- -- 865 872
------- -------- -------- ------- --------
1,668 28,444 10,737 20,673 61,522
------- -------- -------- ------- --------
EXPENSES:
Operating 888 15,391 4,935 10,791 32,005
Depreciation and amortization -- 148 1,011 -- 1,159
General and administrative 83 423 -- -- 506
------- -------- -------- ------- --------
971 15,962 5,946 10,791 33,670
------- -------- -------- ------- --------
Operating income 697 12,482 4,791 9,882 27,852
Equity in net income of investees -- -- -- -- --
Interest and dividend income -- 246 -- -- 246
Interest and debt expense -- (4,157) (2,731) -- (6,888)
Minority interest -- (2,714) -- -- (2,714)
------- -------- -------- ------- --------
Net income $ 697 $ 5,857 $ 2,060 $ 9,882 $ 18,496
======= ======== ======== ======= ========
</TABLE>
(1) Certain revenue and expense items have been reclassified to conform to the
Operating Partnership's presentation.
Page 23
<PAGE> 24
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT
FOR PREVIOUSLY REPORTED ACQUISITIONS
For the Periods in 1998 Prior to Acquisition
(Amounts in thousands)
<TABLE>
<CAPTION>
MERCHANDISE PREVIOUSLY
ONE PENN 150 EAST MART GROUP 770 PRO FORMA REPORTED
PLAZA 58TH STREET OF PROPERTIES BROADWAY ADJUSTMENTS ACQUISITIONS
-------- ----------- ------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $4,034 $ 2,896 $ 25,729 $ 7,418 $ 551 $ 40,628
Expense reimbursements 430 427 -- 1,098 -- 1,955
Other income 661 114 580 126 -- 1,481
------ ------- -------- ------- -------- --------
5,125 3,437 26,309 8,642 551 44,064
------ ------- -------- ------- -------- --------
EXPENSES:
Operating 3,126 1,692 12,957 2,804 (997) 19,582
Depreciation and amortization -- -- -- -- 6,049 6,049
General and administrative -- -- -- -- -- --
------ ------- -------- ------- -------- --------
3,126 1,692 12,957 2,804 5,052 25,631
------ ------- -------- ------- -------- --------
Operating income 1,999 1,745 13,352 5,838 (4,501) 18,433
Equity in net income of investees -- -- -- -- (519) (519)
Interest and dividend income -- -- -- -- (786) (786)
Interest and debt expense -- -- -- -- (17,867) (17,867)
Preferential allocations -- -- (1,012) (367) -- (1,379)
------ ------- -------- ------- -------- --------
Net income $1,999 $ 1,745 $ 12,340 $ 5,471 $(23,673) $ (2,118)
====== ======= ======== ======= ======== ========
</TABLE>
Page 24
<PAGE> 25
CONDENSED CONSOLIDATED PRO FORMA UNAUDITED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL-
HISTORICAL PREVIOUSLY OPERATING CURRENT
OPERATING REPORTED PARTNERSHIP ACQUISITIONS PRO FORMA TOTAL
PARTNERSHIP ACQUISITIONS PRO FORMA COMBINED ADJUSTMENTS PRO FORMA
----------- ------------ ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 168,321 $ 244,202 $ 412,523 $ 72,777 $ 9,432 (M) $ 492,261
-- -- -- (2,471)(N)
Expense reimbursements 36,652 33,552 70,204 3,522 -- 73,726
Other income 4,158 11,175 15,333 4,199 (2,921)(O) 16,611
--------- --------- --------- -------- --------- ---------
209,131 288,929 498,060 80,498 4,040 582,598
--------- --------- --------- -------- --------- ---------
Expenses:
Operating 74,745 137,769 212,514 44,567 (1,884)(N) 255,197
Depreciation and amortization 22,983 36,469 59,452 6,640 139 (P) 66,231
General and administrative 13,580 4,668 18,248 735 -- 18,983
Amortization of officer's deferred
compensation expense 22,917 (22,917) -- -- -- --
--------- --------- --------- -------- --------- ---------
134,225 155,989 290,214 51,942 (1,745) 340,411
--------- --------- --------- -------- --------- ---------
Operating income 74,906 132,940 207,846 28,556 5,785 242,187
Income applicable to Alexander's 7,873 -- 7,873 -- -- 7,873
Income from partially owned entities 4,658 16,382 21,040 -- (672)(Q) 20,368
Interest and other investment
income 23,767 (3,475) 20,292 245 -- 20,537
Interest and debt expense (42,888) (81,882) (124,770) (9,923) (14,062)(R) (148,755)
Gain on marketable securities -- -- -- -- -- --
Minority interest -- -- -- (1,370) 1,370 (S) --
--------- --------- --------- -------- --------- ---------
Net income 68,316 63,965 132,281 17,508 (7,579) 142,210
Preferential allocations (7,293) (9,010) (16,303) -- (2,780)(T) (19,083)
Preferred unit distributions (15,549) (5,137) (20,686) -- -- (20,686)
--------- --------- --------- -------- --------- ---------
Net income applicable to
Class A units $ 45,474 $ 49,818 $ 95,292 $ 17,508 $ (10,359) $ 102,441
========= ========= ========= ======== ========= =========
Net income per Class A unit - basic
(based on 55,098 units and
85,064 units) $ 0.83 $ 1.20
========= =========
Net income per Class A unit - diluted
(based on 57,217 units and
87,139 units) $ 0.79 $ 1.18
========= =========
</TABLE>
Page 25
<PAGE> 26
CONDENSED COMBINING PRO FORMA INCOME STATEMENT
For the Year Ended December 31, 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
HISTORICAL-
MENDIK MARKET CURRENT
689 FIFTH RELP SQUARE 888 SEVENTH ACQUISITIONS
AVENUE (1) PROPERTIES COMPLEX AVENUE COMBINED
---------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 3,289 $ 36,189 $ 15,124 $18,175 $ 72,777
Expense reimbursements 179 -- -- 3,343 3,522
Other income 52 2,921 -- 1,226 4,199
------- -------- -------- ------- --------
3,520 39,110 15,124 22,744 80,498
------- -------- -------- ------- --------
EXPENSES:
Operating 1,596 20,827 6,323 15,821 44,567
Depreciation and amortization -- 5,247 1,393 -- 6,640
General and administrative 99 636 -- -- 735
Amortization of officer's deferred
compensation expense -- -- -- -- --
------- -------- -------- ------- --------
1,695 26,710 7,716 15,821 51,942
------- -------- -------- ------- --------
Operating income 1,825 12,400 7,408 6,923 28,556
Equity in net income of investees -- -- -- -- --
Interest and dividend income -- 245 -- -- 245
Interest and debt expense -- (6,162) (3,761) -- (9,923)
Minority interest -- (1,370) -- -- (1,370)
------- -------- -------- ------- --------
Net income $ 1,825 $ 5,113 $ 3,647 $ 6,923 $ 17,508
======= ======== ======== ======= ========
</TABLE>
(1) Certain revenue and expense items have been reclassified to conform to the
Operating Partnership's presentation.
Page 26
<PAGE> 27
CONDENSED COMBINING PRO FORMA UNAUDITED INCOME STATEMENT
FOR PREVIOUSLY REPORTED ACQUISITIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 OR THE PERIODS IN 1997 PRIOR TO ACQUISITION
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ARBOR THE
MENDIK PROPERTY 90 PARK MONTEHIEDRA THE RIESE 640 FIFTH ONE PENN
COMPANY TRUST AVENUE TOWN CENTER TRANSACTION AVENUE PLAZA
-------- -------- ------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 34,928 $ 19,837 $12,418 $2,059 $ 805 $ 5,053 $48,412
Expense reimbursements 2,908 16,089 2,975 470 43 1,837 5,155
Other income 3,187 72 264 57 23 -- 7,936
-------- -------- ------- ------ ------ ------- -------
41,023 35,998 15,657 2,586 871 6,890 61,503
-------- -------- ------- ------ ------ ------- -------
EXPENSES:
Operating 12,805 16,500 6,420 585 667 4,355 37,511
Depreciation and amortization 4,682 4,301 -- -- -- -- --
General and administrative 2,684 1,539 -- -- -- -- --
Amortization of officer's
deferred Compensation expense -- -- -- -- -- -- --
-------- -------- ------- ------ ------ ------- -------
20,171 22,340 6,420 585 667 4,355 37,511
-------- -------- ------- ------ ------ ------- -------
Operating income 20,852 13,658 9,237 2,001 204 2,535 23,992
Equity in net income of investees 362 -- -- -- -- -- --
Interest and dividend income 899 -- -- -- -- -- --
Interest and debt expense (7,967) (10,272) -- -- -- -- --
Preferential allocations (3,077) -- -- -- -- -- --
Preferred unit distributions -- -- -- -- -- -- --
-------- -------- ------- ------ ------ ------- -------
Net income $ 11,069 $ 3,386 $ 9,237 $2,001 $ 204 $ 2,535 $23,992
======== ======== ======= ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
MERCHANDISE PREVIOUSLY
150 EAST MART GROUP 770 PRO FORMA REPORTED
58TH STREET OF PROPERTIES BROADWAY ADJUSTMENTS ACQUISITIONS
----------- ------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Property rentals $ 13,901 $ 99,087 $ 14,910 $ (7,208) $ 244,202
Expense reimbursements 2,049 -- 2,026 -- 33,552
Other income 547 1,711 -- (2,622) 11,175
-------- --------- -------- --------- ---------
16,497 100,798 16,936 (9,830) 288,929
-------- --------- -------- --------- ---------
EXPENSES:
Operating 8,121 49,339 6,235 (4,769) 137,769
Depreciation and amortization -- -- -- 27,486 36,469
General and administrative -- -- -- 445 4,668
Amortization of officer's
deferred Compensation expense -- -- -- (22,917) (22,917)
-------- --------- -------- --------- ---------
8,121 49,339 6,235 245 155,989
-------- --------- -------- --------- ---------
Operating income 8,376 51,459 10,701 (10,075) 132,940
Equity in net income of investees -- -- -- 16,020 16,382
Interest and dividend income -- 897 -- (5,271) (3,475)
Interest and debt expense -- -- -- (63,643) (81,882)
Preferential allocations -- (4,048) (734) (1,151) (9,010)
Preferred unit distributions -- -- -- (5,137) (5,137)
-------- --------- -------- --------- ---------
Net income $ 8,376 $ 48,308 $ 9,967 $ (69,257) $ 49,818
======== ========= ======== ========= =========
</TABLE>
Page 27
<PAGE> 28
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(amounts in thousands, except per unit amounts)
The unaudited Condensed Consolidated Pro Forma Financial Statements were
prepared to give pro forma effect to the completed acquisitions of 689 Fifth
Avenue, the Mendik RELP Properties, the Market Square Complex, and 888 Seventh
Avenue, the previously reported completed acquisitions and investments (Mendik
Company, Arbor Property Trust, 90 Park Avenue, Americold Corporation and URS
Logistics, Inc., The Montehiedra Town Center, The Riese Transaction, 15%
investment in Charles E. Smith Commercial Realty L.P., 40% investment in The
Hotel Pennsylvania, 640 Fifth Avenue, One Penn Plaza, 150 East 58th Street, the
Merchandise Mart Group of Properties, 770 Broadway and additional interest in
570 Lexington Avenue (all included in the column headed "Previously Reported
Acquisitions")) and the financings attributable thereto, for the period of time
during 1998 prior to their acquisition. The Pro Forma data for certain
previously completed acquisitions, which were disclosed in Forms 8-K previously
filed with the Securities and Exchange Commission has been updated to (i)
include information through September 30, 1998 and (ii) reflect pro forma
adjustments to revenues for straight-line rents for the period, depreciation
adjustments based upon the new basis of the acquired assets, interest expense on
debt used to fund the acquisition and additional minority interest.
The column headed "Historical - Current Acquisitions Combined" included in the
Condensed Consolidated Pro Forma Income Statement for the nine months ended
September 30, 1998 and the year ended December 31, 1997, includes the revenues
and expenses from the Mendik RELP's Consolidated Statement of Operations for the
nine months ended September 30, 1998 as filed on Mendik RELP's Form 10-Q and the
Consolidated Statement of Operations for the year ended December 31, 1997 as
filed on Mendik RELP's Annual Report on Form 10-K. These amounts include the 40%
interest in Two Park Avenue that was owned by Vornado prior to the acquisition
of the remaining 60% interest and accordingly, adjustments are required to
eliminate this equity investment. Such adjustments are included in the column
headed "Pro Forma Adjustments".
The "Historical - Current Acquisitions Combined" column in the Condensed
Consolidated Pro Forma Unaudited Income Statement for the Nine Months Ended
September 30, 1998 reflects revenues and certain expenses for the six months
ended June 30, 1998 for 689 Fifth Avenue. This asset was acquired on August 12,
1998 and accordingly, adjustments are required to record historical revenues and
expenses from June 30, 1998 through the acquisition date. Such adjustments are
included in the Pro Forma Adjustment column. The "Historical - Current
Acquisitions Combined" column also includes the revenues and certain expenses
for the nine months ended September 30, 1998 for the Mendik RELP Properties, the
Market Square Complex and 888 Seventh Avenue.
Acquisitions were consummated through subsidiaries or preferred stock affiliates
of the Operating Partnership (of which Vornado Realty Trust owns an approximate
88.7% limited partnership interest at December 22, 1998 and is the sole general
partner) and were recorded under the purchase method of accounting. The
respective purchase costs were allocated to acquired assets and assumed
liabilities using their relative fair values as of the closing dates, based on
valuations and other studies which are not yet complete. Accordingly, the
initial valuations are subject to change as such information is finalized. The
Operating Partnership believes that any such change will not be significant
since the allocations were principally to real estate.
Page 28
<PAGE> 29
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(amounts in thousands, except per unit amounts)
The following adjustments were required to give pro forma effect to the
transactions being reported:
Pro Forma September 30, 1998 Balance Sheet:
(A) Reflects the acquisition of the Mendik RELP Properties (330
West 34th Street, the Saxon Woods Corporate Center and the
additional 60% interest in Two Park Avenue) for approximately
$106 million, consisting of $31 million in cash from
borrowings under the revolving credit facility, the issuance
of $29 million of common shares and assumed debt of $46
million.
(B) To record the acquisition of the Market Square Complex for
approximately $94.5 million, consisting of $44.6 million in
debt, $43.5 million in a combination of Class A Operating
Partnership Units and Series C-1 Preferred Operating
Partnership Units and $6.4 million in cash.
(C) Reflects the reclassification of the equity investment in the
original 40% interest in Two Park Avenue into its balance
sheet components.
(D) To record the acquisition of 888 Seventh Avenue for
approximately $100 million, consisting of $45 million of cash
from borrowings under the revolving credit facility and $55
million of assumed debt.
(E) Reflects borrowings under the revolving credit facility to
fund the cash portion of the purchase price.
Pro Forma September 30, 1998 Income Statement:
(F) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(G) To eliminate revenues and expenses of non-real estate
operations of the Market Square Complex.
(H) To adjust depreciation expense for the new basis of the
acquired assets, offset by the elimination of historical
depreciation as recorded on the Mendik RELP and Market Square
income statements.
(I) To eliminate income accounted for under the equity method on
the original 40% interest in Two Park Avenue included in
the Operating Partnership's historical income statement.
(J) To record interest expense from assumed debt, at applicable
rates, and from borrowings on the revolving credit facility
used to finance the cash portion of the acquisitions of the
Mendik RELP Properties, 689 Fifth Avenue and 888 Seventh
Avenue at an assumed borrowing rate of 6.5%.
(K) To eliminate historical minority interest in the Mendik RELP.
(L) To record preferential allocations on income from
acquisitions.
Pro Forma December 31, 1997 Income Statement:
(M) To adjust property rentals arising from the straight-lining of
tenant leases that contain escalations over the lease term.
(N) To eliminate revenues and expenses of non-real estate
operations of the Market Square Complex.
(O) To eliminate gain relating to the Mendik RELP properties which
would not be a part of the proposed future operations of the
properties being acquired.
Page 29
<PAGE> 30
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (CONTINUED)
(amounts in thousands, except per unit amounts)
(P) To adjust depreciation expense for the new basis of the
acquired assets, offset by the elimination of historical
depreciation as recorded on the Mendik RELP and Market Square
income statements.
(Q) To eliminate income accounted for under the equity method on
the original 40% interest in Two Park Avenue included in
the Operating Partnership's historical income statement.
(R) To record interest expense from assumed debt, at applicable
rates, and from borrowings on the revolving credit facility
used to finance the cash portion of the acquisitions of the
Mendik RELP Properties, 689 Fifth Avenue and 888 Seventh
Avenue at an assumed borrowing rate of 6.5%.
(S) To eliminate historical minority interest in the Mendik RELP.
(T) To record preferential allocations on income from
acquisitions.
Page 30
<PAGE> 31
VORNADO REALTY L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
VORNADO REALTY L.P.
---------------------------------
(Registrant)
By: Vornado Realty Trust,
---------------------------------
as general partner
Date: February 12, 1999 By: /s/ Irwin Goldberg
---------------------------------
IRWIN GOLDBERG
Vice President,
Chief Financial Officer
Page 31
<PAGE> 32
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT
23.1 Consent of Friedman Alpren & Green LLP
23.2 Consent of Sharrard, McGee & Co., P.A.
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of Deloitte & Touche LLP
Page 32
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-64015 of Vornado Realty Trust on Form S-3, Amendment No. 1 to Registration
Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and Registration
Statement Nos. 333-52573, 333-29011 and 333-09159 on Form S-8 of Vornado Realty
Trust and Amendment No. 4 to Registration Statement No. 333-40787 and Amendment
No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and
Vornado Realty L.P. both on Form S-3, of our report dated July 30, 1998 on the
statement of revenues and certain expenses of 689 Fifth Avenue New York, New
York, for the year ended December 31, 1997, which report appears in the Form 8-K
of Vornado Realty Trust and Vornado Realty L.P. filed with the Securities and
Exchange Commission on or about February 10, 1999.
FRIEDMAN ALPREN & GREEN LLP
New York, New York
February 10, 1999
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-64015 of Vornado Realty Trust on Form S-3, Amendment No. 1 to Registration
Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and Registration
Statement Nos. 333-52573, 333-29011 and 333-09159 on Form S-8 of Vornado Realty
Trust and Amendment No. 4 to Registration Statement No. 333-40787 and Amendment
No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and
Vornado Realty L.P. both on Form S-3, of our report dated September 30, 1998 on
the statement of income and expense of the Market Square Limited Partnership for
the year ended December 31, 1997 and our report dated November 12, 1998 on the
statement of income and expense of the Market Square Limited Partnership for the
nine months ended September 30, 1998 and 1997, which reports appear in the Form
8-K of Vornado Realty Trust and Vornado Realty L.P. dated February 12, 1999.
SHARRARD, MCGEE & CO., P.A.
High Point, NC
February 10, 1999
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-64015 of Vornado Realty Trust on Form S-3, Amendment No. 1 to Registration
Statement No. 333-50095 of Vornado Realty Trust on Form S-3 and Registration
Statement Nos. 333-52573, 333-29011 and 333-09159 on Form S-8 of Vornado Realty
Trust and Amendment No. 4 to Registration Statement No. 333-40787 and Amendment
No. 4 to Registration Statement No. 333-29013 of Vornado Realty Trust and
Vornado Realty L.P. both on Form S-3, of our report dated March 20, 1998 with
respect to the consolidated balance sheets of Mendik Real Estate Limited
Partnership and consolidated venture as of December 31, 1997 and 1996, and the
related consolidated statements of operations, partners' capital (deficit), and
cash flows for each of the years in the three-year period ended December 31,
1997, which report is incorporated by reference in the Form 8-K of Vornado
Realty L.P. as filed with the Securities and Exchange Commission on February 12,
1999.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 12, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Joint Registration
Statements of Vornado Realty Trust and Vornado Realty L.P. (Amendment No. 4 to
Registration Statement No. 333-40787 and Amendment No. 4 to Registration
Statement No. 333-29013), both on Form S-3, of our report dated March 20, 1998
on the statement of revenues and certain expenses of 888 7th Avenue for the year
ended December 31, 1997, which report appears in the Form 8-K of Vornado Realty
L.P. filed with the Securities and Exchange Commission on or about February 12,
1999.
DELOITTE & TOUCHE LLP
New York, New York
February 8, 1999
