Fitch rates new Vornado notes BBB

Fitch Ratings said it has assigned its BBB rating to the recent offering of $200 million 4.75% senior unsecured notes due 2010 by Vornado Realty L.P., the operating partnership of Vornado Realty Trust, and affirmed the ratings at BBB for the $500 million outstanding senior unsecured notes due 2007.

The outlook is stable.

Fitch said the BBB rating is supported by a quality unencumbered asset pool that generates earnings before interest, taxes, depreciation and amortization that Fitch estimates to cover pro forma unsecured interest expense at 6.2 times, the company's diversified tenant roster with the top 20 tenants of the company accounting for 26.4% of annualized revenues, and Vornado's management infrastructure, which has a track record of investing opportunistically and successfully in several different real estate business lines.

Additionally, Fitch Ratings said it looks positively on the company's well laddered debt maturity schedule, with no more than 6% of total debt expiring annually over the next four years, the company's full availability under its $600 million unsecured line of credit, which enhances the company's liquidity, as well as its demonstrated access to capital both internally and externally sourced.

The current ratings balance these strengths against the risks inherent in the company's heavy concentration of office space in two markets (New York and Washington D.C.). These two office markets combined contributed 69% to the company's nine months ended Sept 30 EBITDA.

Fitch said Vornado's interest coverage ratios remain strong for current ratings, with EBITDA coverage of total interest expense of 3.7x for period ending Sept. 30, up from 3.3x on a year-over-year basis and in line with the company's historical average of 3.5x.

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