Fitch rates Vornado debentures BBB

Fitch Ratings said it assigned a BBB rating to the recent offering of $500 million 3.875% exchangeable senior debentures due 2025 issued by Vornado Realty LP.

The net proceeds from this offering are to be utilized for general corporate purposes and likely will be used for the funding of Vornado's equity commitment to the Toys 'R' Us transaction.

Fitch affirmed the BBB ratings for the $950 million outstanding senior unsecured notes due 2007 to 2010 issued by Vornado Realty LP, the operating partnership of Vornado Realty Trust, and BBB- for the company's outstanding preferred stock. The outlook is stable.

For Vornado, Fitch said the Toys 'R' Us transaction represents an about $400 million equity investment in Toys, which they will account for under the equity method.

Despite the stated business plan, concerns about the transaction center around what Fitch views as considerable risk surrounding the successful operation of the new Toys 'R' Us as a retailer given the level of leverage needed to finance the acquisition.

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