Dealmaker: Vornado Completes $442M New York Retail, Signage Acquisition

Vornado Realty Trust, New York, acquired the remaining 46 percent interest in the New York Marriott Marquis Times Square’s retail condominium for $442 million.

The equity real estate investment trust acquired the interest from Host Hotels & Resorts, Bethesda, Md. Vornado had previously acquired a 54 percent interest and redeveloped the property. The original agreement said Vornado would become the 100 percent owner through a put/call arrangement on a pre-negotiated formula and this transaction satisfied the put/call arrangement.

Vornado now owns 100 percent of the 45,000 square feet of retail space, currently fully leased to T-Mobile, Invicta, Swatch, Levi’s and Sephora, the 1,611-seat Marquis Theater and the largest digital sign in New York with a 330-foot wide, six-story 25,000-square-foot display above the retail.

The property at 1535 Broadway spans the entire block front from 45th Street to 46th Street on Broadway in Times Square, directly across from Vornado’s 1540 Broadway retail property.

Vornado had previously accounted for its interest in the property as a capital lease. The REIT’s basis in the property now totals $663 million. The property should generate an 8.5 percent stabilized cash net operating income yield on Vornado’s $663 million investment beginning in first quarter 2019.

Vornado also borrowed $120 million to refinancing 4 Union Square South, a 206,000-square-foot Manhattan retail property. The interest-only loan carried a rate of LIBOR plus 1.40 percent (currently 3.47 percent) and matures in 2025 as extended.

The loan replaced the previous $113 million of indebtedness that bore interest at LIBOR plus 2.15 percent with a 2019 scheduled maturity.