S&P: Vornado unaffected

Standard & Poor's said that its BBB+ corporate credit ratings on Vornado Realty Trust and its operating subsidiary, Vornado Realty LP, would not be immediately affected by a recent series of strategic and financial transactions.

These transactions include a $450 million capital commitment to acquire a highly leveraged interest in Toys 'R' Us Inc., the election to receive stock as consideration in the merger between Sears Roebuck and Co. and Kmart Holding Corp., the pending $113 million acquisition of a luxury retail condominium in Manhattan, and the issuance of $500 million of 3.875% exchangeable senior debentures (proceeds of which effectively prefund the Toys 'R' Us investment).

S&P said it does believe that Vornado's more opportunistic strategy increases the potential for volatility in the REIT's cash flow. However, this risk remains mitigated, at the present time, by Vornado's ample liquidity, solid balance sheet and core portfolio of very stable commercial real estate assets.

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