REGO II REAL ESTATE RETENTION AGREEMENT

EXHIBIT 10.56

REGO II REAL ESTATE

RETENTION AGREEMENT

By this Rego II Real Estate Retention Agreement, dated as of the 20 ^th day of December, 2007, VORNADO REALTY L.P., a Delaware limited partnership having an office c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019 (“Vornado”) agrees to act as special real estate consultant to ALEXANDER’S OF REGO PARK II, INC., a Delaware corporation having an office c/o Vornado Realty Trust, 888 Seventh Avenue, New York, New York 10019 (“Owner”), with respect to the leasing and disposition of Owner’s real property, as well as the sale of Owner’s right, title and interest in the fixtures and improvements thereat (which is disposed of with the real property) as more specifically described in the attached Schedule A ( the “Asset(s)”), and the compensation Vornado expects to receive.

Vornado will provide those services that are reasonably necessary to market the Assets, as contemplated by this Retention Agreement. Such services may include, but are not necessarily limited to, those generally described below:

2.     Creating a marketing program which may include newspapers, magazine or journal advertising, flyer solicitation and placement of signs, as appropriate. Preparing and disseminating all such marketing materials, all of which shall be approved by Owner and shall be at the sole cost and expense of Owner.

3.     Communicating with parties who have expressed an interest in the Assets and responding and providing information to, negotiating with, and soliciting offers from, prospective purchasers, including landlords, and making recommendations to Owner as to the advisability of accepting particular offers and settlements.

5.     When requested, meeting periodically with Owner, their accountants and attorneys, in connection with the status of Owner’s efforts and recommending to Owner and its counsel the proper method of handling the particular problems encountered with respect to the disposition of the Assets.

6.     If required, appearing in Court during the term of this retention, to testify or to consult with Owners in connection with the marketing or disposition of the Assets.

Vornado will actively and diligently discharge its obligations under this Agreement. Vornado shall be retained by Owner for the purpose of performing the services outlined above, upon the following terms and conditions:

1.     Vornado shall have the sole and exclusive authority to offer each Asset for disposition and the “exclusive right to sell” and “exclusive right to lease” each Asset. All communications and inquiries regarding any Asset, whether directed to Owner (including but not limited to their officers, agents and employees), or Owners’ counsel, accountants, or other professionals, shall be redirected to Vornado.

2.     Owner shall retain the complete discretion and authority to accept or reject any offer. Owner shall not have any liability whatsoever to Vornado for exercising its discretion with respect to the acceptance or rejection of any offer.

B.     Term: The term of Vornado’s retention shall be from the date hereof and shall continue for one (1) year hereafter, and, thereafter, shall automatically renew on a year-to-year basis, terminable by either party at the end of each year on not less than sixty (60) days’ prior notice.

(a)     When Owner disposes of an Asset, whether individually or as part of a package or as part of the disposition of Owner’s business or a portion thereof, or as part of a plan of reorganization, by sale (other than a foreclosure sale), assignment, lease, sublet or otherwise to a third party, or by assignment of a leasehold to the landlord or by termination of a leasehold for which Owner receives consideration (any of the foregoing, an “Asset Transaction”); or if in lieu of a disposition

of the Assets, one or more third parties acquires control of Owner by merger, outright purchase, or otherwise in one or multiple transactions (any of the foregoing, an “In Lieu Asset Transaction”; an In Lieu Asset Transaction or an Asset Transaction being referred to herein as an “Acquisition Transaction”); then, (i) if the Gross Proceeds from the Asset Transaction or In Lieu Asset Transaction, as the case may be, exceed $50,000,000, Owner shall pay an amount equal to one percent (1%) of the Gross Proceeds from the Asset Transaction or In Lieu Asset Transaction, as the case may be, and (ii) if the Gross Proceeds from the Asset Transaction or In Lieu Asset Transaction, as the case may be, are equal to or less than $50,000,000, Owner shall pay an amount equal to three (3%) of the Gross Proceeds from the Asset Transaction or In Lieu Asset Transaction, as the case may be, except in the event of a lease or sublease, in which event Owner shall pay an amount equal to:

(i) three (3%) percent of the total base rent Gross Proceeds payable during the first ten (10) years of the term, plus

(ii) two (2%) percent of the total base rent Gross Proceeds payable during the eleventh (11 ^th ) through the twentieth (20 ^th ) years of the term, plus

(iii) one (1%) percent of the total base rent Gross Proceeds payable during the balance of the term, but in no event to exceed the thirtieth (30) year;

(In the event of a month-to-month tenancy, the fee shall be 50% of the first month’s base rental, payable in four (4) equal monthly installments, but only for so long as such tenancy shall continue. Additional fees shall only become earned and payable (i) upon a tenant’s exercise of Option(s) or Rights(s) of First Refusal, to Renew, Extend Lease or Occupy Additional Space or (ii) upon a month-to-month tenant entering into a new lease or sublease of an Asset.)

(b)     Vornado’s fee will be paid in full simultaneously with the closing, sale, assignment or other consummation of the transaction. Notwithstanding the immediately preceding sentence, Vornado’s fees under this Agreement and interest accrued with respect to such fees will be payable in an aggregate amount not to exceed $4,000,000 in any calendar year (or such lesser amount as may be due Vornado hereunder), less any amounts paid to Vornado under (i) that certain Real Estate Retention Agreement dated as of July 20, 1992, as amended or (ii) that certain 59 ^th Street Real Estate Retention Agreement dated as of July 3, 2002, as amended, with respect to the same period. Interest shall accrue on the unpaid fees outstanding hereunder from time to time at the 1-year LIBOR rate plus 100 basis points, such rate to be determined annually as of the first day of January of each year. The fees and interest payable hereunder shall be paid in equal monthly installments (the “Installments”) until such fees and interest accrued thereon have been paid in full. Installments shall be applied first to interest accrued hereunder and then to reduction of the fees outstanding hereunder from time to time. Fees payable with respect to a sale, assignment or In Lieu Asset Transaction shall be paid first and Vornado shall not be entitled to receive any fees with respect to a lease or sublease to the extent the tenant is in default of its payment obligations thereunder, except as a result of a default by the Owner or a termination by Owner of the lease or sublease (other than a termination by the Owner resulting from the tenant’s monetary default). Any fees that become payable with respect to the leases listed on Schedule B attached hereto shall be payable to Owner under this Agreement in accordance with the above provisions.

(c)     In the event that Owner leases or subleases an Asset and the transfe