Since the credit crisis of mid-August, investors have become increasingly cautious due to higher borrowing costs and the threat of falling property values, as these factors make it more difficult to sell real estate at a profit.
Merrill Lynch's CEO Stan O'Neal resigned delaying negotiations between Merrill Lynch and Vornado for a deal to pay Vornado $1 billion for a 67-year lease for land across from the Pennsylvania Station in Midtown Manhattan, where Merrill would build a three million square foot headquarters.
New Constructs, an equity research firm ranked #1 by Institutional Investor Magazine in 2005, announced that it was downgrading Vornado's stock to its lowest rating, "very dangerous," arguing that Vornado's downside risk far outweighs its upside potential.
The Fed cut interest rates a half a point while Wall Street had only expected a quarter point cut. REIT stocks generally rose on the announcement.
