The Real Deal New York

Vornado confirms purchase of Pearl Paint building on Canal St.

Acquisition is REIT's second bet on gritty street below Soho once famed for knockoffs
By Adam Pincus | November 04, 2014 11:45AM

Vornado Realty Trust confirmed today that it is the new owner of the former Pearl Paint building, marking the firm’s second retail acquisition on Canal Street south of Soho, information from its public filings show.

The real estate investment trust, one of the city’s largest office and retail players, paid $16.4 million for 304-306 Canal Street, using a 1031 tax exchange mechanism completed over several months, city records show. The 14,000-square-foot, five-story building at 304-306 Canal, between Broadway and Church Street, has about 2,300 square feet on the ground floor.

The seller was the Sathue family, who were long-time owners, and the deal first went into contract in June 2014. It closed in July with a Chicago-based tax exchange entity. That entity then transferred title to a Vornado entity in August, city records show.

Vornado, led by CEO Steven Roth, has been an active player in the investment sales market in recent years. Yesterday it announced it would sell 1740 Broadway for $605 million, and also confirmed that it closed on the $700 million purchase of the St. Regis Fifth Avenue retail space.

Vornado’s first purchase on the stretch south of Soho was in 2011, when it acquired the 15,000-square-foot 334 Canal Street through a bankruptcy auction for $8.2 million.

Vornado’s filings say 304-306 Canal Street is under development, as is 334 Canal Street. A spokesperson for the REIT did not immediately respond to a request for comment.

The seven-block shopping district on Canal Street from West Broadway to Centre Street south of Soho is slowly transforming from a discount stereo, perfume and knockoff handbags destination, into a more traditional retail area as large owners buy up property.

In April, a company owned by Joe Sitt’s son Jack, Colt Equities, purchased a long-term ground lease for 335 Canal Street for $13.5 million, as The Real Deal reported.