Possible Federal Bailout for Vornado

Vornado Realty Trust, of which Vornado Charles E. Smith is a platform, has banded together with other real estate development groups to ask the federal government for a bailout. The WBJ reports that the developers involved wrote to Treasury Secretary Paulson warning that thousands of properties are in danger of foreclosure. When the commercial mortgage-backed securities market vanished, there was no longer easy money for refinancing. Commercial mortgages are typically repaid in 5 to 10 year terms. Many loans issued in 2004 now have huge balloon payments coming due. Without relatively quick refinancing, an owner can be forced into a distress sale or foreclosure.

Luckily for Southwest, Vornado has only two DC properties in this type of danger, and both are in Southeast. For now, it looks like Waterfront Station, Vornado's new street creation in Southwest, is safe.

Of note, the WBJ article states that "Washington’s distressed and troubled commercial property inventory ranks it fifth (by volume) in the nation, behind New York, Los Angeles, Las Vegas and South Florida."