Experts: Recent Deals Reflect Coming Slowdown

NEW YORK CITY-The party might be over, and recent deals–along with yesterday’s stock-market plunge–may signal that the much-touted downturn is at hand. Last week, as reported by GlobeSt.com, 75% of the interest in the Chrysler Building sold for $300 million and experts said it showed owners were trying to cash in before the market softened. Following this news, the Goldman Sachs Group reneged on its plans to develop an $850 million trading structure at 55 Water St. Now, Vornado is entering the final days of negotiations for the World Trade Center, for which it plans to spend $3.25 billion, and has been put on S&P’s negative CreditWatch. Yesterday (March 12), the Nasdaq composite index hit its lowest mark in two years.

By now it is common knowledge that Vornado Realty Trust secured the winning bid on the World Trade Center, procuring a 99-year lease from the Port Authority of New York and New Jersey for $3.25 billion–a big deal for big money. This Thursday, March 15, is the official final day of the negotiation process for that bid. At the same time, Vornado is facing tax disputes and troubled credit because of the pricey purchase.

Standard & Poor’s has placed Vornado Realty Trust and Vornado Realty LP on CreditWatch with negative implications, affecting securities valued at $450 million. At the time of the rating Gregory J. Whyte of Morgan Stanley Dean Witter told GlobeSt.com, “Does this mean Vornado does not have the capacity to close on the deal–absolutely not. Does it mean that if Vornado can’t convince the S&P to re-evaluate them the cost of the transaction will go up? Maybe, but that’s about it.”