"The Port Authority is a very conservative institution and they're very concerned about credit worthiness for any potential purchaser," George Donohue of William B. May tells GlobeSt.com. "This new development may give the Port Authority a reason to further analyze the deal."

But will further due diligence on the part of the Port Authority result in another firm capturing the site? "My intuition is that Vornado and the Port Authority have their best people working on this," answers Donohue. "The Port Authority has gone down a long road to find the right suitor and have taken a year to dwindle the candidates down to Vornado. If there's a solution to be found, they'll find it."

The spirit of optimism surrounding the closure of a deal with Vornado seems to be in the air and executives are not seeing S&P's move as a deal-killer. "The rating and the deal are connected but separate," says Geregory J. Whyte of Morgan Stanley Dean Witter. "Does this mean that 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."

Although the deal remains solid there is still a question in the air about what this potentially negative rating will mean for Vornado itself. "With any big deal, the company in question would be in continual contact with the rating industry to keep them up on the details," relates Gary Boston of Salomon Smith Barney. "Vornado is keeping S&P apprised to counteract the possible downturn in their rating."

At present S&P is still gathering data before a rating is given. If Vornado can provide a strategy, reason or suitable plan S&P can drop the CreditWatch at any time.

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