Vornado Capital Partners Real Estate Fund (the "Fund")

6 Months Ended

Jun. 30, 2013

Vornado Capital Partners Real Estate Fund (the "Fund")

4. Vornado Capital Partners Real Estate Fund (the “Fund”)

We are the general partner and investment manager of our $800,000,000 Fund, to which we committed $200,000,000. The Fund has an eight-year term and a three-year investment period which ended in July 2013. During the investment period, the Fund was our exclusive investment vehicle for all investments that fit within its investment parameters, as defined. The Fund is accounted for under the AICPA Investment Company Guide and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.

At June 30, 2013, the Fund had ten investments with an aggregate fair value of $622,124,000, or $114,751,000 in excess of cost, and had remaining unfunded commitments of $246,582,000, of which our share was $61,645,000. Below is a summary of income from the Fund for the three and six months ended June 30, 2013 and 2012.

		For the Three Months				For the Six Months
(Amounts in thousands)		Ended June 30,				Ended June 30,
		2013		2012		2013		2012
Net investment income (loss)		$	877	$	(834)	$	3,925	$	4,084
Net unrealized gains			33,593		21,135		47,109		27,979
Income from Real Estate Fund			34,470		20,301		51,034		32,063
Less (income) attributable to noncontrolling interests			(14,359)		(12,306)		(23,899)		(20,239)
Income from Real Estate Fund attributable to Vornado ⁽¹⁾		$	20,111	$	7,995	$	27,135	$	11,824
___________________________________
___________________________________
(1)	Excludes management, leasing and development fees of $827 and $717 for the three months ended June 30, 2013 and 2012, respectively, and $1,676 and $1,420 for the six months ended June 30, 2013 and 2012, respectively, which are included as a component of "fee and other income" on our consolidated statements of income.