UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:

June 30, 2016

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from:

Commission File Number:

001-34482

VORNADO REALTY L.P.

(Exact name of registrant as specified in its charter)

Delaware		13-3925979
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

888 Seventh Avenue, New York, New York		10019
(Address of principal executive offices)		(Zip Code)

(212) 894-7000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

o Large Accelerated Filer		o Accelerated Filer
x Non-Accelerated Filer (Do not check if smaller reporting company)		o Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x


PART I.		Financial Information:	Page Number

	Item 1.	Financial Statements:

		Consolidated Balance Sheets (Unaudited) as of
		June 30, 2016 and December 31, 2015	3

		Consolidated Statements of Income (Unaudited) for the
		Three and Six Months Ended June 30, 2016 and 2015	4

		Consolidated Statements of Comprehensive Income (Unaudited)
		for the Three and Six Months Ended June 30, 2016 and 2015	5

		Consolidated Statements of Changes in Equity (Unaudited) for the
		Six Months Ended June 30, 2016 and 2015	6

		Consolidated Statements of Cash Flows (Unaudited) for the
		Six Months Ended June 30, 2016 and 2015	8

		Notes to Consolidated Financial Statements (Unaudited)	10

		Report of Independent Registered Public Accounting Firm	32

	Item 2.	Management's Discussion and Analysis of Financial Condition
		and Results of Operations	33

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	72

	Item 4.	Controls and Procedures	72


PART II.		Other Information:

	Item 1.	Legal Proceedings	73

	Item 1A.	Risk Factors	73

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73

	Item 3.	Defaults Upon Senior Securities	73

	Item 4.	Mine Safety Disclosures	73

	Item 5.	Other Information	73

	Item 6.	Exhibits	73

SIGNATURES			74

EXHIBIT INDEX			75

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VORNADO REALTY L.P.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

(Amounts in thousands, except unit amounts)			June 30, 2016		December 31, 2015
ASSETS
Real estate, at cost:
	Land		$	4,154,201	$	4,164,799
	Buildings and improvements			12,541,161		12,582,671
	Development costs and construction in progress			1,302,108		1,226,637
	Leasehold improvements and equipment			112,096		116,030
		Total		18,109,566		18,090,137
	Less accumulated depreciation and amortization			(3,374,867)		(3,418,267)
Real estate, net				14,734,699		14,671,870
Cash and cash equivalents				1,644,067		1,835,707
Restricted cash				94,628		107,799
Marketable securities				194,489		150,997
Tenant and other receivables, net of allowance for doubtful accounts of $11,260 and $11,908				95,623		98,062
Investments in partially owned entities				1,499,792		1,550,422
Real estate fund investments				524,150		574,761
Receivable arising from the straight-lining of rents, net of allowance of $2,489 and $2,751				991,953		931,245
Deferred leasing costs, net of accumulated amortization of $227,015 and $218,239				462,649		480,421
Identified intangible assets, net of accumulated amortization of $194,463 and $187,360				210,010		227,901
Assets related to discontinued operations				8,678		37,020
Other assets				612,992		477,088
			$	21,073,730	$	21,143,293

LIABILITIES, REDEEMABLE PARTNERSHIP UNITS AND EQUITY
Mortgages payable, net			$	9,746,818	$	9,513,713
Senior unsecured notes, net				844,868		844,159
Unsecured revolving credit facilities				115,630		550,000
Unsecured term loan, net				371,455		183,138
Accounts payable and accrued expenses				480,094		443,955
Deferred revenue				314,367		346,119
Deferred compensation plan				119,292		117,475
Liabilities related to discontinued operations				8,104		12,470
Other liabilities				480,030		426,965
	Total liabilities			12,480,658		12,437,994
Commitments and contingencies
Redeemable partnership units:
	Class A units - 12,385,829 and 12,242,820 units outstanding			1,240,069		1,223,793
	Series D cumulative redeemable preferred units - 177,101 units outstanding			5,428		5,428
		Total redeemable partnership units		1,245,497		1,229,221
Equity:
	Partners' capital			8,420,056		8,417,454
	Earnings less than distributions			(1,898,505)		(1,766,780)
	Accumulated other comprehensive income			72,556		46,921
		Total Vornado Realty L.P. equity		6,594,107		6,697,595
Noncontrolling interests in consolidated subsidiaries				753,468		778,483
	Total equity			7,347,575		7,476,078
			$	21,073,730	$	21,143,293

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(Amounts in thousands, except per unit amounts)		For the Three Months Ended				For the Six Months Ended
		June 30,				June 30,
		2016		2015		2016		2015
REVENUES:
	Property rentals	$	527,178	$	514,843	$	1,046,670	$	1,015,117
	Tenant expense reimbursements		60,841		62,215		120,416		129,136
	Fee and other income		33,689		39,230		67,659		78,837
Total revenues			621,708		616,288		1,234,745		1,223,090
EXPENSES:
	Operating		245,138		242,690		501,487		497,183
	Depreciation and amortization		141,313		136,957		284,270		261,079
	General and administrative		45,564		39,189		94,268		97,681
	Impairment loss and acquisition and transaction related costs		2,879		4,061		168,186		6,042
Total expenses			434,894		422,897		1,048,211		861,985
Operating income			186,814		193,391		186,534		361,105
Income (loss) from partially owned entities			642		(5,641)		(3,598)		(8,384)
Income from real estate fund investments			16,389		26,368		27,673		50,457
Interest and other investment income, net			10,236		5,666		13,754		16,458
Interest and debt expense			(105,576)		(92,092)		(206,065)		(183,766)
Net gain on disposition of wholly owned and partially owned assets			159,511		-		160,225		1,860
Income before income taxes			268,016		127,692		178,523		237,730
Income tax (expense) benefit			(2,109)		88,072		(4,940)		87,101
Income from continuing operations			265,907		215,764		173,583		324,831
Income (loss) from discontinued operations			2,475		(364)		3,191		15,815
Net income			268,382		215,400		176,774		340,646
Less net income attributable to noncontrolling interests in
	consolidated subsidiaries		(13,025)		(19,186)		(22,703)		(35,068)
Net income attributable to Vornado Realty L.P.			255,357		196,214		154,071		305,578
Preferred unit distributions			(20,412)		(20,414)		(40,824)		(39,910)
NET INCOME attributable to Class A unitholders		$	234,945	$	175,800	$	113,247	$	265,668


INCOME PER CLASS A UNIT - BASIC:
	Income from continuing operations, net	$	1.16	$	0.88	$	0.54	$	1.25
	Income from discontinued operations, net		0.01		-		0.02		0.08
	Net income per Class A unit	$	1.17	$	0.88	$	0.56	$	1.33
	Weighted average units outstanding		200,369		199,038		200,220		198,857

INCOME PER CLASS A UNIT - DILUTED:
	Income from continuing operations, net	$	1.15	$	0.87	$	0.54	$	1.23
	Income from discontinued operations, net		0.01		-		0.01		0.08
	Net income per Class A unit	$	1.16	$	0.87	$	0.55	$	1.31
	Weighted average units outstanding		201,975		200,833		201,821		200,833

DISTRIBUTIONS PER CLASS A UNIT		$	0.63	$	0.63	$	1.26	$	1.26


See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)


(Amounts in thousands)			For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2016		2015		2016		2015
Net income			$	268,382	$	215,400	$	176,774	$	340,646
Other comprehensive income (loss):
	Increase (reduction) in unrealized net gain on
		available-for-sale securities		28,019		(25,000)		39,113		(46,332)
	Pro rata share of other comprehensive loss of
		nonconsolidated subsidiaries		(628)		(1,191)		(622)		(1,034)
	(Reduction) increase in value of interest rate swaps and other			(6,976)		2,848		(11,171)		2,077
Comprehensive income				288,797		192,057		204,094		295,357
Less comprehensive income attributable to noncontrolling interests
	in consolidated subsidiaries			(13,025)		(19,186)		(22,703)		(35,068)
Comprehensive income attributable to Vornado Realty L.P.			$	275,772	$	172,871	$	181,391	$	260,289


See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)


(Amounts in thousands)															Non-
													Accumulated		controlling
							Class A Units				Earnings		Other		Interests in
			Preferred Units				Owned by Vornado				Less Than		Comprehensive		Consolidated		Total
			Units		Amount		Units		Amount		Distributions		Income (Loss)		Subsidiaries		Equity
Balance, December 31, 2015				52,677	$	1,276,954		188,577	$	7,140,500	$	(1,766,780)	$	46,921	$	778,483	$	7,476,078
Net income attributable to Vornado Realty L.P.				-		-		-		-		154,071		-		-		154,071
Net income attributable to redeemable
	partnership units			-		-		-		-		(7,044)		-		-		(7,044)
Net income attributable to noncontrolling
	interests in consolidated subsidiaries			-		-		-		-		-		-		22,703		22,703
Distributions to Vornado				-		-		-		-		(237,832)		-		-		(237,832)
Distributions to preferred unitholders				-		-		-		-		(40,727)		-		-		(40,727)
Class A Units issued to Vornado:
	Upon redemption of redeemable Class A
		units, at redemption value		-		-		195		18,208		-		-		-		18,208
	Under Vornado's employees' share option plan			-		-		38		3,093		-		-		-		3,093
	Under Vornado's dividend reinvestment plan			-		-		8		717		-		-		-		717
Contributions:
	Other			-		-		-		-		-		-		19,674		19,674
Distributions:
	Real estate fund investments			-		-		-		-		-		-		(56,533)		(56,533)
	Other			-		-		-		-		-		-		(10,970)		(10,970)
Deferred compensation units and options				-		-		7		954		(186)		-		-		768
Increase in unrealized net gain on
	available-for-sale securities			-		-		-		-		-		39,113		-		39,113
Pro rata share of other comprehensive loss
	of nonconsolidated subsidiaries			-		-		-		-		-		(622)		-		(622)
Reduction in value of interest rate swaps				-		-		-		-		-		(11,170)		-		(11,170)
Adjustments to carry redeemable Class A
	units at redemption value			-		-		-		(20,369)		-		-		-		(20,369)
Redeemable partnership units' share of above
	adjustments			-		-		-		-		-		(1,685)		-		(1,685)
Other				-		-		1		(1)		(7)		(1)		111		102
Balance, June 30, 2016				52,677	$	1,276,954		188,826	$	7,143,102	$	(1,898,505)	$	72,556	$	753,468	$	7,347,575


See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - CONTINUED
(UNAUDITED)


(Amounts in thousands)															Non-
													Accumulated		controlling
							Class A Units				Earnings		Other		Interests in
			Preferred Units				Owned by Vornado				Less Than		Comprehensive		Consolidated		Total
			Units		Amount		Units		Amount		Distributions		Income (Loss)		Subsidiaries		Equity
Balance, December 31, 2014				52,679	$	1,277,026		187,887	$	6,880,518	$	(1,505,385)	$	93,267	$	743,956	$	7,489,382
Net income attributable to Vornado Realty L.P.				-		-		-		-		305,578		-		-		305,578
Net income attributable to redeemable
	partnership units			-		-		-		-		(15,485)		-		-		(15,485)
Net income attributable to noncontrolling
	interests in consolidated subsidiaries			-		-		-		-		-		-		35,068		35,068
Distribution of Urban Edge properties				-		-		-		-		(464,262)		-		(341)		(464,603)
Distributions to Vornado				-		-		-		-		(237,160)		-		-		(237,160)
Distributions to preferred unitholders				-		-		-		-		(39,849)		-		-		(39,849)
Class A Units issued to Vornado:
	Upon redemption of redeemable Class A
		units, at redemption value		-		-		400		43,278		-		-		-		43,278
	Under Vornado's employees' share option plan			-		-		195		12,979		(2,579)		-		-		10,400
	Under Vornado's dividend reinvestment plan			-		-		7		701		-		-		-		701
Contributions:
	Real estate fund investments			-		-		-		-		-		-		51,725		51,725
Distributions:
	Real estate fund investments			-		-		-		-		-		-		(62,495)		(62,495)
	Other			-		-		-		-		-		-		(255)		(255)
Conversion of Series A preferred units
	to Class A units			(1)		(16)		1		16		-		-		-		-
Deferred compensation units and options				-		-		7		1,654		(359)		-		-		1,295
Reduction in unrealized net gain on
	available-for-sale securities			-		-		-		-		-		(46,332)		-		(46,332)
Pro rata share of other comprehensive loss
	of nonconsolidated subsidiaries			-		-		-		-		-		(1,034)		-		(1,034)
Increase in value of interest rate swaps				-		-		-		-		-		2,073		-		2,073
Adjustments to carry redeemable Class A
	units at redemption value			-		-		-		229,521		-		-		-		229,521
Redeemable partnership units' share of above
	adjustments			-		-		-		-		-		2,635		-		2,635
Other				-		-		-		-		955		4		(92)		867
Balance, June 30, 2015				52,678	$	1,277,010		188,497	$	7,168,667	$	(1,958,546)	$	50,613	$	767,566	$	7,305,310


See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(Amounts in thousands)			For the Six Months Ended June 30,
			2016		2015
Cash Flows from Operating Activities:
Net income			$	176,774	$	340,646
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization (including amortization of deferred financing costs)			299,541		272,942
	Real estate impairment losses			160,700		256
	Net gain on disposition of wholly owned and partially owned assets			(160,225)		(1,860)
	Straight-lining of rental income			(83,883)		(64,121)
	Return of capital from real estate fund investments			71,888		83,443
	Distributions of income from partially owned entities			46,500		37,821
	Amortization of below-market leases, net			(29,811)		(26,132)
	Other non-cash adjustments			23,049		26,569
	Net realized and unrealized gains on real estate fund investments			(21,277)		(41,857)
	Loss from partially owned entities			3,598		7,636
	Net gains on sale of real estate and other			(2,210)		(32,243)
	Reversal of allowance for deferred tax assets			-		(90,030)
	Changes in operating assets and liabilities:
		Real estate fund investments		-		(95,000)
		Tenant and other receivables, net		2,358		(5,051)
		Prepaid assets		(131,927)		(138,473)
		Other assets		(29,303)		(46,858)
		Accounts payable and accrued expenses		6,634		(26,440)
		Other liabilities		(9,113)		(16,632)
Net cash provided by operating activities				323,293		184,616

Cash Flows from Investing Activities:
	Development costs and construction in progress			(277,214)		(200,970)
	Additions to real estate			(170,265)		(137,528)
	Proceeds from sales of real estate and related investments			130,249		334,725
	Investments in partially owned entities			(90,659)		(137,465)
	Distributions of capital from partially owned entities			87,977		29,666
	Acquisitions of real estate and other			(46,807)		(381,001)
	Net deconsolidation of 7 West 34th Street			(42,000)		-
	Investments in loans receivable and other			(11,700)		(23,919)
	Restricted cash			(7,483)		25,118
	Purchases of marketable securities			(4,379)		-
	Proceeds from sales and repayments of mortgage and mezzanine loans receivable and other			22		16,772
Net cash used in investing activities				(432,259)		(474,602)

See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)

(Amounts in thousands)				For the Six Months Ended June 30,
				2016		2015
Cash Flows from Financing Activities:
	Proceeds from borrowings			$	1,325,246	$	1,746,460
	Repayments of borrowings				(1,032,115)		(1,607,574)
	Distributions to Vornado				(237,832)		(237,160)
	Distributions to redeemable security holders and noncontrolling interests
		in consolidated subsidiaries			(83,266)		(77,447)
	Distributions to preferred unitholders				(40,727)		(39,849)
	Debt issuance and other costs				(29,478)		(14,053)
	Contributions from noncontrolling interests in consolidated subsidiaries				11,874		51,725
	Proceeds received from exercise of Vornado stock options				3,810		13,683
	Repurchase of Class A units related to equity compensation agreements and related
		tax withholdings and other			(186)		(2,939)
	Cash included in the spin-off of Urban Edge Properties				-		(225,000)
Net cash used in financing activities					(82,674)		(392,154)
Net decrease in cash and cash equivalents					(191,640)		(682,140)
Cash and cash equivalents at beginning of period					1,835,707		1,198,477
Cash and cash equivalents at end of period				$	1,644,067	$	516,337


Supplemental Disclosure of Cash Flow Information:
	Cash payments for interest, excluding capitalized interest of $13,918 and $17,550			$	181,432	$	178,461
	Cash payments for income taxes			$	5,003	$	6,584


Non-Cash Investing and Financing Activities:
	Write-off of fully depreciated assets			$	(220,654)	$	(81,027)
	Accrued capital expenditures included in accounts payable and accrued expenses				144,079		70,672
	Change in unrealized net gain (loss) on securities available-for-sale				39,113		(46,332)
	Adjustments to carry redeemable Class A units at redemption value				(20,369)		229,521
	Decrease in assets and liabilities resulting from the deconsolidation of investments
		that were previously consolidated
			Real estate, net		(122,047)		-
			Mortgages payable, net		(290,418)		-
	Non-cash distribution of Urban Edge Properties:
			Assets		-		1,722,263
			Liabilities		-		(1,482,660)
			Equity		-		(239,603)
	Transfer of interest in real estate to Pennsylvania Real Estate Investment Trust				-		(145,313)
	Financing assumed in acquisitions				-		62,000
	Like-kind exchange of real estate:
			Acquisitions		46,698		62,355
			Dispositions		(29,639)		(38,822)


See notes to consolidated financial statements (unaudited).

VORNADO REALTY L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

Vornado Realty L.P. (the “Operating Partnership” and/or the “Company”) is a Delaware limited partnership. Vornado Realty Trust (“Vornado”) is the sole general partner of, and owned approximately 93.6% of the common limited partnership interest in, the Operating Partnership at June 30, 2016. All references to “we,” “us,” “our,” the “Company” and “Operating Partnership” refer to Vornado Realty L.P. and its consolidated subsidiaries.

2. Basis of Presentation

The accompanying consolidated financial statements are unaudited and include the accounts of Vornado Realty L.P. and its consolidated subsidiaries. All inter-company amounts have been eliminated. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2015, as filed with the SEC.

We have made estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the operating results for the full year.

3. Recently Issued Accounting Literature

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an update ("ASU 2014-09") establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. In August 2015, the FASB issued an update (“ASU 2015-14”) to ASC 606, Deferral of the Effective Date, which defers the adoption of ASU 2014-09 to interim and annual reporting periods in fiscal years that begin after December 15, 2017. In March 2016, the FASB issued an update (“ASU 2016-08”) to ASC 606, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU 2014-09. In April 2016, the FASB issued an update (“ASU 2016-10”) to ASC 606, Identifying Performance Obligations and Licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09. In May 2016, the FASB issued an update (“ASU 2016-12”) to ASC 606, Narrow-Scope Improvements and Practical Expedients, which amends certain aspects of the new revenue recognition standard pursuant to ASU 2014-09. We are currently evaluating the impact of the adoption of these ASUs on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting. ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that began after December 15, 2015. The adoption of this update as of January 1, 2016, did not have any impact on our consolidated financial statements.

VORNADO REALTY L.P.

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3. Recently Issued Accounting Literature - continued

In February 2015, the FASB issued an update (“ASU 2015-02”) Amendments to the Consolidation Analysis to ASC Topic 810, Consolidation. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs, and (iv) provide a scope exception for certain entities. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The adoption of this update on January 1, 2016 resulted in the identification of additional VIEs, but did not have an impact on our consolidated financial statements other than additional disclosures (see Note 13 - Variable Interest Entities).

In January 2016, the FASB issued an update (“ASU 2016-01”) Recognition and Measurement of Financial Assets and Financial Liabilities to ASC Topic 825, Financial Instruments. ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2016-01 on our consolidated financial statements.

In February 2016, the FASB issued (“ASU 2016-02”) Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase. Lessees are required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. Lessees will recognize expense based on the effective interest method for finance leases or on a straight-line basis for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.

In March 2016, the FASB issued an update (“ASU 2016-09”) Improvements to Employee Share-Based Payment Accounting to ASC 718. ASU 2016-09 amends several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial statements.

4. Acquisitions

On May 20, 2016, we contributed $19,650,000 for a 50.0% equity interest in a joint venture that will develop a 33,000 square foot office and retail building, located on Houston Street in Manhattan. The development cost of this project is estimated to be approximately $104,000,000. At closing, the joint venture obtained a $65,000,000 construction loan, of which approximately $22,100,000 was outstanding at June 30, 2016. The loan, which bears interest at LIBOR plus 3.00% (3.47% at June 30, 2016), matures in May 2019 with two one-year extension options. Because this joint venture is a VIE and we determined we are the primary beneficiary, we consolidate the accounts of this joint venture from the date of our investment.

VORNADO REALTY L.P.

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5. Real Estate Fund Investments

We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”), which has an eight-year term and a three-year investment period that 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 ASC 946, Financial Services – Investment Companies (“ASC 946”) 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.

We are also the general partner and investment manager of Crowne Plaza Times Square Hotel Co-Investment (the “Co-Investment”), which owns a 24.7% interest in the Crowne Plaza Times Square Hotel. The Fund owns the remaining 75.3% interest. The Co-Investment is also accounted for under ASC 946. We consolidate the accounts of the Co-Investment into our consolidated financial statements, retaining the fair value basis of accounting.

At June 30, 2016, we had six real estate fund investments with an aggregate fair value of $524,150,000, or $215,215,000 in excess of cost, and had remaining unfunded commitments of $117,907,000, of which our share was $34,522,000. Below is a summary of income from the Fund and the Co-Investment for the three and six months ended June 30, 2016 and 2015.

(Amounts in thousands)		For the Three Months Ended				For the Six Months Ended
		June 30,				June 30,
		2016		2015		2016		2015
Net investment income		$	1,723	$	2,150	$	6,396	$	8,600
Net realized gains on exited investments			-		886		14,676		25,591
Previously recorded unrealized gain on exited investment			-		-		(14,254)		(23,279)
Net unrealized gains on held investments			14,666		23,332		20,855		39,545
Income from real estate fund investments			16,389		26,368		27,673		50,457
Less income attributable to noncontrolling interests			(8,845)		(15,872)		(14,818)		(29,411)
Income from real estate fund investments attributable to Vornado Realty L.P.⁽¹⁾		$	7,544	$	10,496	$	12,855	$	21,046


(1)	Excludes management, leasing and development fees of $935 and $633 for the three months ended June 30, 2016 and 2015, respectively, and $1,695 and $1,337 for the six months ended June 30, 2016 and 2015, respectively, which are included as a component of "fee and other income" in our consolidated statements of income.

6. Marketable Securities

Below is a summary of our marketable securities portfolio as of June 30, 2016 and December 31, 2015.

(Amounts in thousands)		As of June 30, 2016						As of December 31, 2015
				GAAP		Unrealized				GAAP		Unrealized
		Fair Value		Cost		Gain		Fair Value		Cost		Gain
Equity securities:
	Lexington Realty Trust	$	186,721	$	72,549	$	114,172	$	147,752	$	72,549	$	75,203
	Other		7,768		4,379		3,389		3,245		-		3,245
		$	194,489	$	76,928	$	117,561	$	150,997	$	72,549	$	78,448

VORNADO REALTY L.P.

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7. Investments in Partially Owned Entities

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)

As of June 30, 2016, we own 1,654,068 Alexander’s common shares, representing a 32.4% interest in Alexander’s. We account for our investment in Alexander’s under the equity method. We manage, lease and develop Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.

As of June 30, 2016, the market value (“fair value” pursuant to ASC Topic 820, Fair Value Measurements (“ASC 820”)) of our investment in Alexander’s, based on Alexander’s June 30, 2016 closing share price of $409.23, was $676,894,000, or $547,099,000 in excess of the carrying amount on our consolidated balance sheet. As of June 30, 2016, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $39,786,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.

Urban Edge Properties (“UE”) (NYSE: UE)

As of June 30, 2016, we own 5,717,184 UE operating partnership units, representing a 5.4% ownership interest in UE. We account for our investment in UE under the equity method and record our share of UE’s net income or loss on a one-quarter lag basis. During 2015, we provided transition services to UE, primarily for information technology, human resources, tax and financial planning. In 2016, we continue to provide UE information technology support. UE is providing us with leasing and property management services for (i) certain small retail properties that we plan to sell, and (ii) our affiliate, Alexander’s, Rego Park retail assets. As of June 30, 2016, the fair value of our investment in UE, based on UE’s June 30, 2016 closing share price of $29.86, was $170,715,000, or $146,847,000 in excess of the carrying amount on our consolidated balance sheet.

Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)

As of June 30, 2016, we own 6,250,000 PREIT operating partnership units, representing an 8.0% interest in PREIT. We account for our investment in PREIT under the equity method and record our share of PREIT’s net income or loss on a one-quarter lag basis. As of June 30, 2016, the fair value of our investment in PREIT, based on PREIT’s June 30, 2016 closing share price of $21.45, was $134,063,000, or $8,241,000 in excess of the carrying amount on our consolidated balance sheet. As of June 30, 2016, the carrying amount of our investment in PREIT exceeds our share of the equity in the net assets of PREIT by approximately $64,712,000. The majority of this basis difference resulted from the excess of the fair value of the PREIT operating units received over our share of the book value of PREIT’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of PREIT’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in PREIT’s net loss. The basis difference related to the land will be recognized upon disposition of our investment.

One Park Avenue

On March 7, 2016, the joint venture, in which we have a 55% ownership interest, completed a $300,000,000 refinancing of One Park Avenue, a 947,000 square foot Manhattan office building. The loan matures in March 2021 and is interest only at LIBOR plus 1.75% (2.21% at June 30, 2016). The property was previously encumbered by a 4.995%, $250,000,000 mortgage which matured in March 2016.

Mezzanine Loan – New York

On March 17, 2016, we entered into a joint venture, in which we own a 33.3% interest, which owns a $142,050,000 mezzanine loan. The interest rate is LIBOR plus 8.875% (9.32% at June 30, 2016) and the debt matures in November 2016, with two three-month extension options. At June 30, 2016, the joint venture has a $7,950,000 remaining commitment, of which our share is $2,650,000. The joint venture’s investment is subordinate to $350,000,000 of third party debt. We account for our investment in the joint venture under the equity method.

VORNADO REALTY LP 10-Q