Moody's affirms Vornado

Moody's Investors Service said it affirmed the senior debt rating of Vornado Realty Trust at Baa2 and the preferred stock at Baa3. The outlook remains stable.

According to Moody's, this rating action is in response to Vornado's announcement of its acquisition of Toys 'R' Us in a joint venture with Kohlberg Kravis Roberts & Co. and Bain Capital LLC. The transaction is valued at $6.6 billion.

The three partners share equally in the joint venture, and Vornado plans to fund its $400 million share with unsecured debt.

Moody's said it believes that this acquisition could be a positive strategic step for Vornado to gain access to a diverse and potentially valuable retail portfolio of over 1,200 stores in the United States and overseas.

Moody's notes, however, that as a result of the transaction, Vornado's effective leverage (debt + preferred / gross assets) will increase and its fixed charge coverage will be reduced, slightly.

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