Sep. 17--Vornado Realty Trust, the third-largest real estate investment trust by market value, may soon take part in a federal program to pump credit to consumers as well as owners of commercial real estate.

The Federal Reserve enacted its Term Asset-Backed Securities Loan Facility, or TALF program, during the financial markets panic last year. Aimed at restarting the markets for asset-backed securities, this program is separate from the Troubled Asset Relief Program, or TARP, the large government bailout aimed at propping up the nation's banking system.

Since then, TALF has provided money for loans for cars, higher education and small businesses that are bundled into securities and sold to investors. This fall, the program is expected to back new commercial mortgage-backed securities, or CMBS. The CMBS market is seen as a crucial pipeline of financing for the commercial real estate market, which faces looming mortgage maturities that will need refinancing over the next few years.

Commercial Mortgage Alert, a trade publication, said in a report last week that Vornado was "next in the queue" to participate in the TALF program after Developers Diversified Realty, a retail-oriented real estate investment trust.

Vornado, among the country's largest publicly traded owners of office building and shopping centers, has offices in New York and Paramus.

The Wall Street Journal, citing anonymous sources, reported in July that Vornado was planning to possibly raise as much as $600 million through the TALF program.

Vornado said in second-quarter regulatory filings that the company was "exploring issuing commercial mortgage-backed securities that would be eligible to participate" in the TALF program, but added that "there could be no assurance." A spokeswoman for the historically reticent company declined to comment.

Orest Mandzy, co-founder of Commercial Real Estate Direct, a Pennsylvania-based trade publication, predicts Vornado won't raise funds through the TALF program because it probably won't need to.

Vornado faces about $200 million in debt maturities this year, and another $1 billion in debt maturities in 2010 -- "a really manageable maturity schedule for them," said Mandzy.

Vornado was able to raise $750 million in a stock offering earlier this year, and borrowing has become less expensive recently in the market for unsecured corporate bonds, Mandzy noted.

"They don't really need to tap that market," Mandzy said of the CMBS market.

If the CMBS market restarts (the number of CMBS issued in late 2007 peaked, and then basically fell to zero), the loans are likely to be conservatively underwritten like much of the other types of financing available today, said Gary Gabriel, an executive vice president at Cushman & Wakefield's offices in East Rutherford.

That may not be of much help to borrowers who need to refinance CMBS loans aggressively underwritten at 90 percent of the loan's value. A functioning CMBS market would be helpful but "doesn't fix the problem," Gabriel said. "The problem is there's far too much debt on existing properties."

Meanwhile, Vornado plans a $1 billion joint venture fund that would include $200 million of the firm's own money, to serve as an "alternate source of capital," said Joseph Macnow, Vornado's chief financial officer.

At an investor conference this week, Macnow said the company may use the cash for the "multibillions" of buying opportunities it expects as over-leveraged commercial property owners are forced to sell.

This company contains information from Bloomberg News.

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