The Real Deal New York

Vornado seeks piece of Kushner’s 666 Fifth

By Adam Pincus | June 17, 2011 05:58PM

The large office and retail landlord Vornado Realty Trust is negotiating with Kushner Companies to buy a stake in 666 Fifth Avenue‘s equity and is talking with representatives of the building’s lenders to cut its debt, several industry sources said.

The real estate investment trust Vornado would pay an undefined “nine-figure” sum (meaning something between $100 million and $999 million), according to a source, for a piece of the building.

Sources gave conflicting accounts of how far along any deal was. Several said no deal was finalized, and one said Kushner was talking with multiple potential partners such as funds. But it was clear that Kushner was actively pursuing investors in the building.

In the spring of 2010, Kushner asked that the $1.2 billion in securitized loans on the 1.5 million-square-foot building located between 52nd and 53rd streets, be put into special servicing with LNR Partners, so that the debt could be restructured. 

Kushner paid $1.8 billion for the building at the height of the market in 2007 and has been struggling with the office portion of the property. The retail section that was sold off in 2008 with Kushner retaining an interest, has fared far better.

Vornado is on a bit of a roll recently with distressed properties, having partnered with REIT SL Green Realty to pick up a controlling interest in 280 Park Avenue in May; and Vornado bought a controlling interest in 1 Park Avenue in March.

Vornado declined to discuss 666 Fifth Avenue, citing its policy not to comment on “rumor and speculation.” A spokesperson for Kushner said the company had no comment.

The debt on the building, which was packaged into a commercial mortgage-backed security, is in special servicing with LNR, which is based in Miami Beach.

Vornado acquired a 26 percent piece of LNR in 2010, and when they bought it insiders expected they would profit on their ownership interest by having an insider’s view on distressed properties.

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