Vornado Announces its Share of Toys aRa Us Third Quarter Financial Results

PARAMUS, N.J.--([ BUSINESS WIRE ])--Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.7% share of Toys aRa Usa� third quarter financial results in its fourth quarter ending December 31, 2010. Vornadoa�s results will include a net loss of $30,685,000, or $0.15 per diluted share, compared to a net loss of $26,597,000, or $0.13 per diluted share recorded in the quarter ended December 31, 2009.

"Earnings Before Interest, Taxes, Depreciation and Amortization."

Vornadoa�s share of negative Funds From Operations (aFFOa) before income taxes for the quarter ending December 31, 2010 will be $57,311,000, or $0.28 per diluted share, compared to negative FFO before income taxes of $31,590,000, or $0.16 per diluted share in the prior yeara�s quarter. Vornadoa�s share of negative FFO after income taxes for the quarter ending December 31, 2010 will be $19,714,000, or $0.10 per diluted share, compared to negative FFO after income taxes of $16,504,000, or $0.08 per diluted share in the prior yeara�s quarter.

Vornadoa�s share of net loss and negative FFO before income taxes for the quarter ending December 31, 2010 include a write-off of deferred financing charges of $8,500,000. Net loss and negative FFO after income taxes include this item in the net amount of $5,525,000.

The business of Toys is highly seasonal; historically, Toysa� fourth quarter net income accounts for more than 80% of its fiscal year net income.

Attached is a summary of Toysa� financial results and Vornadoa�s 32.7% share of its equity in Toysa� net loss, as well as reconciliations of net loss to earnings before interest, taxes, depreciation and amortization (aEBITDAa) and FFO.

Vornado Realty Trust is a fully-integrated equity real estate investment trust.

Certain statements contained herein may constitute aforward-looking statementsa within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.

Toys "R" Us, Inc. Condensed Consolidated Statements of Operations a" Unaudited

	For the Quarter Ended
	October 30, 2010						October 31, 2009
(Amounts in thousands)	Results on a Historical Basis			Results on Vornadoa�s Purchase Price Accounting Basis			Results on Vornadoa�s Purchase Price Accounting Basis
Net sales	$	2,719,000		$	2,719,000		$	2,667,000
Cost of sales		1,732,000			1,732,000			1,717,000
Gross margin		987,000			987,000			950,000

Selling, general and administrative expenses		957,000			965,000			905,000
Depreciation and amortization		93,000			96,100			98,200
Other (income) expense, net		(1,000	)		600			(15,300	)
Total operating expenses		1,049,000			1,061,700			987,900
Operating loss		(62,000	)		(74,700	)		(37,900	)
Interest expense		(158,000	)		(163,500	)		(117,000	)
Interest income		2,000			2,000			1,000
Loss before income taxes		(218,000	)		(236,200	)		(153,900	)
Income tax benefit		125,000			133,000			64,500
Net loss		(93,000	)		(103,200	)		(89,400	)
Less: Net loss attributable to noncontrolling interest		-			-			2,000
Net loss attributable to Toys aRa Us, Inc.	$	(93,000	)	$	(103,200	)	$	(87,400	)

Vornadoa�s 32.7% equity in Toysa� net loss				$	(33,757	)	$	(28,571	)
Management fee from Toys, net					2,984			1,608
Interest income on credit facility					88			366
Total Vornado net loss from its investment in Toys				$	(30,685	)	$	(26,597	)

See page 3 for a reconciliation of net loss to FFO.

Reconciliation of Vornadoa�s net loss from its investment in Toys to EBITDA ⁽¹⁾:
Net loss				$	(30,685	)	$	(26,597	)
Interest and debt expense					53,481			37,493
Depreciation and amortization					31,434			30,859
Income tax benefit					(43,504	)		(20,520	)
Vornadoa�s share of Toysa� EBITDA ⁽¹⁾				$	10,726		$	21,235

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(1)

EBITDA represents aEarnings Before Interest, Taxes, Depreciation and Amortization.a Management considers EBITDA a supplemental measure for making decisions and assessing the unlevered performance of its segments as it relates to the total return on assets as opposed to the levered return on equity. EBITDA should not be considered a substitute for net income. EBITDA may not be comparable to similarly titled measures employed by other companies.

Toys "R" Us, Inc. Funds From Operations - Unaudited

(Amounts in thousands)	For the Quarter Ended
	October 30, 2010			October 31, 2009
Reconciliation of Vornado's net loss from its investment in Toys to FFO ⁽¹⁾:
Net loss	$	(30,685	)	$	(26,597	)
Depreciation and amortization of real property		16,878			15,527
Income tax effect of above adjustment		(5,907	)		(5,434	)
Vornado's share of Toysa� FFO ⁽¹⁾	$	(19,714	)	$	(16,504	)

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(1)

FFO is computed in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (aNAREITa). NAREIT defines FFO as GAAP net income or loss adjusted to exclude net gains from sales of depreciated real estate assets, depreciation and amortization expense from real estate assets, extraordinary items and other specified non-cash items, including the pro rata share of such adjustments of unconsolidated subsidiaries. FFO and FFO per diluted share are used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. FFO does not represent cash generated from operating activities and is not necessarily indicative of cash available to fund cash requirements and should not be considered as an alternative to net income as a performance measure or cash flows as a liquidity measure. FFO may not be comparable to similarly titled measures employed by other companies.

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Vornado Announces its Share of Toys aRa Us Third Quarter Financial Results