Vornado Realty Trust (NYSE:VNO) announced today that it will record its 32.8% share of Toys ?R? Us' first quarter financial results in its second quarter ending June 30, 2007. Vornado's results will include a net loss of $20,029,000, or $.11 per diluted share compared to a net loss of $7,884,000 or $.05 per diluted share recorded in the quarter ended June 30, 2006.

Vornado's share of negative Funds From Operations (?FFO?) before income taxes for the quarter ended June 30, 2007 is $17,867,000 or $.10 per share as compared to negative FFO before income taxes of $27,594,000 or $.15 per share in the prior year's quarter. In the quarter ended June 30, 2007, Vornado's results will include negative FFO of $8,917,000, or $.05 per diluted share as compared to zero FFO in the quarter ended June 30, 2006.

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

Attached is a summary of Toys' financial results and Vornado's 32.8% share of its equity in Toys' net loss, as well as reconciliations of net loss to earnings before interest, taxes, depreciation and amortization (?EBITDA?) and FFO.

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

Certain statements contained herein may constitute ?forward-looking statements? 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 ? Unaudited

 
For the Quarter Ended
May 5, 2007 April 29, 2006
(Amounts in thousands) Results on a
Historical
Basis 		Results on
Vornado's
Purchase Price
Accounting
Basis 		Results on
Vornado's
Purchase Price
Accounting
Basis
Net sales $ 2,581,000 $ 2,581,000 $ 2,389,000
Cost of sales 1,671,000 1,671,000 1,556,000
Gross margin 910,000 910,000 833,000
 
Selling, general and administrative expenses 792,000 803,500 741,000
Depreciation and amortization 96,000 106,700 99,000
Net gains on sales of properties (3,000 ) (4,900 ) ?
Restructuring and other charges 2,000 2,000 (1,000 )
Total operating expenses 887,000 907,300 839,000
Operating income (loss) 23,000 2,700 (6,000 )
Interest expense (122,000 ) (124,900 ) (135,000 )
Interest income 8,000 8,000 8,000
Loss before income tax benefit (91,000 ) (114,200 ) (133,000 )
Income tax benefit 44,000 46,400 99,000
Minority interest 6,000 6,000 ?
Net loss $ (41,000 ) $ (61,800 ) $ (34,000 )
 
Vornado's 32.8% equity in Toys' net loss $ (20,279 ) $ (11,169 )

Adjustment to eliminate Vornado's share of the after-tax net gain recognized by Toys on the sale of 2 stores to Vornado on April 11, 2007, which Vornado will reflect as an adjustment to the basis of its investment

(1,045 ) ?
Management fee from Toys, net 584 1,076
Interest income on credit facility 711 2,209
Total Vornado net loss from its investment in Toys $ (20,029 ) $ (7,884 )
 
See page 3 for a reconciliation of net loss to FFO.
 

Reconciliation of Vornado's net loss from its investment in Toys to EBITDA (1):

Net loss $ (20,029 ) $ (7,884 )
Interest and debt expense 40,985 44,348
Depreciation and amortization 33,303 32,522
Income tax benefit (14,934 ) (32,522 )

Vornado's 32.8% share of Toys' EBITDA (1)

$ 39,325 $ 36,464 
    (1)  EBITDA represents "Earnings Before Interest, Taxes, Depreciation
     and Amortization." Management considers EBITDA a supplemental
     measure for making decisions and assessing the un-levered
     performance of its segments as it relates to the total return on
     assets as opposed to the levered return on equity.  As properties
     are bought and sold based on a multiple of EBITDA, management
     utilizes this measure to make investment decisions as well as to
     compare the performance of its assets to that of its peers.
     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
May 5, 2007 April 29, 2006

Reconciliation of Vornado's net loss from its investment in Toys to FFO (1):

Net loss $ (20,029 ) $ (7,884 )
Depreciation and amortization of real property 17,096 12,155
Net loss on sale of real estate ? 657
Income tax effect of above adjustments (5,984 ) (4,928 )
Vornado's share of FFO (1) $ (8,917 ) $ ?
(1) FFO is computed in accordance with the definition adopted by the
    Board of Governors of the National Association of Real Estate
    Investment Trusts ("NAREIT"). NAREIT defines FFO as net income or
    loss determined in accordance with Generally Accepted Accounting
    Principles ("GAAP"), excluding extraordinary items as defined
    under GAAP and gains or losses from sales of previously
    depreciated operating real estate assets, plus specified non-cash
    items, such as real estate asset depreciation and amortization,
    and after adjustments for unconsolidated partnerships and joint
    ventures. FFO is used by management, investors and industry
    analysts as supplemental measures of operating performance of
    equity REITs. FFO should be evaluated along with GAAP net income
    and income per diluted share (the most directly comparable GAAP
    measures), as well as cash flow from operating activities,
    investing activities and financing activities, in evaluating the
    operating performance of equity REITs. Management believes that
    FFO is helpful to investors as supplemental performance measures
    because these measures exclude the effect of depreciation,
    amortization and gains or losses from sales of real estate, all of
    which are based on historical costs which implicitly assumes that
    the value of real estate diminishes predictably over time. Since
    real estate values instead have historically risen or fallen with
    market conditions, these non-GAAP measures can facilitate
    comparisons of operating performance between periods and among
    other equity REITs. FFO does not represent cash generated from
    operating activities in accordance with GAAP and is not
    necessarily indicative of cash available to fund cash needs as
    disclosed in the Company's Consolidated Statements of Cash Flows.
    FFO should not be considered as an alternative to net income as an
    indicator of the Company's operating performance or as an
    alternative to cash flows as a measure of liquidity.

Vornado Realty Trust
Joseph Macnow, 201-587-1000