Vornado Confirms Will Spin Off Shopping Center Business

VORNADO REALTY TRUST (NYSE: VNO) (“Vornado”) announced today itsBoard of Trustees has approved a plan to spin off its shopping center business consisting of 81 strip shopping centers andfour malls into a new publicly traded REIT (“SpinCo”). The strip shopping centers are primarily located in the denselypopulated Northeast. The malls consist of the powerful Bergen Town Center in Paramus, New Jersey, Monmouth Mall inEatontown, New Jersey and two malls in suburbs of San Juan, Puerto Rico. The 85 retail properties total approximately16.1 million square feet and had average occupancy of 95.5% at December 31, 2013. SpinCo's 2014 net operating incomeis estimated to be approximately $200 million.Jeffrey S. Olson, currently Chief Executive Officer of Equity One Inc., will be SpinCo's Chairman of the Boardand Chief Executive Officer. Robert Minutoli, Executive Vice President of Vornado's existing Retail Segment, willremain with SpinCo as its Chief Operating Officer. Vornado's retail management team and personnel will also remain withSpinCo. Steven Roth, Chairman of the Board and Chief Executive Officer of Vornado, will serve on the Board of Directors ofSpinCo.Vornado believes that SpinCo's portfolio will be well positioned to deliver both internal growth through activeasset management and redevelopments and external growth through acquisitions and selective new developments.SpinCo's demographics are among the highest of its peers having average population within 3 miles of 149,000 and averagehousehold income of $71,000. SpinCo's average base rent is $18.75 per square foot as compared to the peer median of $15.66per square foot.Vornado will retain, for disposition in the near term, 20 small retail assets which do not fit SpinCo's strategy,valued at approximately $100 million. Further, Vornado will retain Beverly Connection and Springfield Town Center,both of which are under contract for disposition. Vornado's business after these dispositions and the spin-off will be highlyconcentrated in New York City and Washington, DC, and be comprised of its high quality office portfolios and the largest,most valuable portfolio of Manhattan street retail assets.The pro rata distribution of SpinCo's shares to Vornado common shareholders and Vornado Realty L.P. commonunitholders is intended to be treated as a tax-free spin-off for U.S. federal income tax purposes. Vornado anticipates that itscurrent annualized dividend of $2.92 per share will be maintained through the combination of Vornado's and SpinCo'sdividends.The initial Form 10 registration statement relating to the spin-off is expected to be filed with the Securities andExchange Commission (“SEC”) in the second quarter of 2014, and the distribution is expected to be completed in the fourthquarter of 2014. The transaction is subject to certain conditions, including the SEC declaring that SpinCo's registrationstatement is effective, filing and approval of SpinCo's listing application, receipt of third party consents, and formal approvaland declaration of the distribution by Vornado's Board of Trustees. Vornado may, at any time and for any reason until theproposed transaction is complete, abandon the separation or modify or change its terms.Goldman, Sachs & Co. and Morgan Stanley are Vornado's exclusive financial advisors and Sullivan & Cromwell LLPis legal advisor to Vornado in connection with the proposed transaction.