Vornado announces “handshake” deal to sell 666 Fifth stake to Kushner

Steve Roth's firm will hold onto the retail

TRD New York /
Apr.April 06, 2018 05:01 PM

Charles Kushner, 666 Fifth Avenue and Steve Roth (Credit: Getty Images)

Vornado Realty Trust chairman Steve Roth said Friday he had a “handshake” deal to sell the company’s 49.5 percent stake in 666 Fifth Avenue to the office building’s majority owner, Kushner Companies.

In the company’s annual letter to shareholders, Vornado said it intended to retain its ownership in the building’s retail condominium, even if the deal to sell its office stake goes through. The sale, Roth said, would pay off Vornado’s share of debt on the property. Additionally, capital gains stemming from deducted losses on the underperforming building would be made up for by other losses related to its ownership in now bankrupt Toys “R” Us, Roth said.

“While not the outcome we expected going in, it’s now the appropriate outcome for us and for our partner,” he told shareholders.

Bloomberg was the first to report the news.

Reports surfaced in February that the two companies had entered talks on such a sale.

Four years after Kushner Companies bought the tower for what was in 2007 a record breaking sum of $1.8 billion, Vornado acquired nearly half of it, paying just $80 million and agreeing to take on half of the building’s $1.2 billion in debt. That debt, which was collateralized in a CMBS loan, comes due in February 2019, and sent Kushner Companies on a global search for potential partners to invest in or refinance the building.

A representative for Kushner Companies did not respond to The Real Deal‘s request for comment.

The occupancy rate at the 1.5 million-square-foot tower is 73 percent, according to data service Trepp. Kushner Companies was known to have been attempting to empty the out-of-date office tower and replace it with a massive mixed-use project, featuring a hotel, condominium units and more retail space. The redevelopment plan was originally valued at as much as $12 billion, but has not moved forward.

Christian Bautista contributed reporting.

 

Related Articles

arrow_forward_ios
Vornado's Steve Roth and 220 Central Park South (Credit: Getty Images, iStock)

Free and clear: Vornado pays off debt at 220 CPS

Vornado chairman and CEO Steven Roth, and 608 Fifth Avenue (Credit: Getty Images)

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call

Steven Roth, CEO of Vornado and 640 Fifth Avenue (Credit: Getty Images and Vornado Realty Trust)

Bank of China issues $500M to Vornado in refi of 640 Fifth Avenue

Facebook CEO Mark Zuckerberg and Apple CEO Tim Cook with a rendering of the Farley development (Credit: Getty Images, SOM iStock)

Facebook facing off with Apple over space in Vornado’s Farley Building conversion

Kushner goes to Broward, buying site near Fort Lauderdale train station

220 Central Park South and Michael Cantanucci (Credit: Getty Images and Google Maps)

Car dealer drops $38M for condo at 220 CPS

Facebook CEO Mark Zuckerberg and a rendering of the Farley Post Office building redevelopment (Credit: Getty Images, SOM)

Facebook in talks for massive lease at Vornado’s Farley Building

Vornado president Michael Franco and 512 West 22nd Street (Credit: VNO)

WarnerMedia to anchor Vornado’s West Chelsea spec office

arrow_forward_ios