Fitch Rates Vornado Realty's $150MM Preferred Offering 'BBB-'.

NEW YORK -- Fitch Ratings has assigned a 'BBB-' rating to the recent offering of $150 million 6.75% series F perpetual preferred securities issued by Vornado Realty Trust (Vornado or the company) (NYSE:VNO). The net proceeds from this offering are to be utilized for general corporate purposes. Fitch has also affirmed the ratings at 'BBB' for the approximately $950 million outstanding senior unsecured notes due 2007-2010 issued by Vornado Realty L.P., the operating partnership of Vornado Realty Trust, and 'BBB-' for the company's outstanding preferred stock. The Rating Outlook is Stable.

Fitch notes that Vornado has several series of higher coupon callable preferreds that could be redeemed for savings in preferred distributions that would lead to an improvement in the company's fixed charge coverage ratio. As of Sept. 30, 2004, Fitch-calculated fixed-charge coverage was 2.3 times (x), slightly below the last twelve month (LTM) average of 2.5x, but right in line with the company's average fixed-charge coverage for 2003 and 2002.

Fitch's 'BBB' rating continues to be supported by a quality unencumbered asset pool, which generates earnings before interest, taxes, depreciation, and amortization (EBITDA), that Fitch estimates to cover unsecured interest expense by 7.7x. The company's diversified tenant roster, with the top 20 tenants of the company accounting for 26.2% of annualized revenues (the largest tenant is the U.S. government at 11.8% with the next being McGraw-Hill Companies, Inc. at 1.2%, which is rated 'A+' by Fitch) and Vornado's management infrastructure, which has a track record of investing opportunistically and successfully in several different real estate business lines, also contribute support to the rating.

Additionally, Fitch looks positively on the company's laddered debt maturity schedule, with approximately 7% of total debt expiring in 2005, 13% in 2006, and 19% in 2007 and 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 65% to the company's nine months ended Sept. 30, 2004 EBITDA. These risks include the reliance on the strength of local and regional economies to support Vornado's investment. Additional concerns center on the continued high rate of vacancy in the U.S. office market (estimated to be 17.8% by Property and Portfolio Research Inc.) due to the lack of business expansion, which has lead to anemic tenant demand.

Fitch continues to maintain a negative outlook for the office sector as a whole, although Vornado's high level of occupancy in New York and Washington, D.C. at 96.4% and 94.1%, respectively, partially mitigates some of the sector risk.

Vornado's interest coverage ratios continue to support the current ratings, with EBITDA coverage of total interest expense of 4.1x for the period ending Sept. 30, 2004, in line with LTM trends and up from 3.7x on a year-over-year basis. Including adjustments for capital expenditures and straight line rents, fixed-charge coverage was 2.3x. Fitch believes this level of coverage provides an appropriate measure of protection for the unsecured bondholders, as well as preferred shareholders relative to the assigned rating. Based on a conservative valuation performed by Fitch, it is estimated that unencumbered asset value covers total unsecured debt by 4x.

Vornado Realty Trust, based in New York City, owns and manages approximately 87 million square feet of real estate. The company's office portfolio comprises 20 office buildings that Vornado owns all or a portion of in the New York City metropolitan area, aggregating approximately 13.3 million square feet. Additionally, the company owns a 100% interest in Charles E. Smith Commercial Realty LP, which owns approximately 14.3 million square feet of office properties in Northern Virginia and Washington, D.C. and manages an additional 8.5 million square feet of office and other commercial properties in the Washington D.C. area. The office division accounted for 65% of total EBITDA for the nine months ended Sept. 30, 2004.

Vornado also owns and manages 84 retail properties, including two regional malls and two super-regional malls, located primarily in the Northeast and Puerto Rico, totaling 14.0 million square feet; the Merchandise Mart Properties portfolio, including the Merchandise Mart in Chicago; a 47.6% interest in AmeriCold Realty Trust, a REIT, that owns and/or operates 100 cold storage warehouse facilities nationwide; 33.0% of the outstanding common stock of Alexander's, Inc.; the Hotel Pennsylvania in New York City; a 22.3% interest in The Newkirk Master Limited Partnership, which owns office, retail, and industrial properties nationwide and various debt interests in those properties; eight dry warehouse/industrial properties in New Jersey; and other real estate investments.

More information about Vornado Realty Trust can be found on the Fitch Ratings web site at www.fitchratings.com.