Vornado takes bath on Madison Avenue retail condo sale

REIT sold retail property for $50M

Simon and David Reuben and Vornado’s Steve Roth with 828-850 Madison Avenue (Getty, Beyer Blinder Belle)
Simon and David Reuben and Vornado’s Steve Roth with 828-850 Madison Avenue (Getty, Beyer Blinder Belle)

Billionaires know how to find a bargain.

The price of one of the three retail properties that Ruben Brothers recently acquired from Vornado Realty Trust was just $50 million, less than half of what the real estate investment trust had paid for it, according to property records.

The 18,000-square-foot retail condominium at 828-850 Madison Avenue was among Vornado’s five retail property sales announced in late August.

At that time, Vornado said it had agreed to sell the struggling retail properties — whose occupancy stands at just 30 percent — in Soho and on Madison Avenue on the Upper East Side for a total of $184.5 million, resulting in a loss of about $7 million.

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Depending on how you calculate, however, the loss from the 828-850 Madison Avenue transaction alone appears to be much larger.

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In 2005, the REIT paid $113 million for the retail condo, which covers the entire blockfront between East 69th and East 70th streets, property records show. Luxury brands such as Cartier and Gucci have been among the tenants of the space.

Vornado and Reuben Brothers did not respond to requests for comment.

Reuben Brothers, a real estate investment firm owned and operated by billionaire brothers David and Simon Reuben, already lists the newly acquired retail site on its website, along with two other buildings included in Vornado’s five-property portfolio: 677-679 and 759-771 Madison Avenue. Commercial Observer first reported that Reuben Brothers snapped up these three properties.

The sale price of the 677-679 Madison Avenue property was recently recorded with the city as $20 million, while the sale of 759-771 Madison Avenue has yet to be registered.

The remaining two properties in the Vornado portfolio — 478-482 Broadway and 155 Spring Street in Soho — have been scooped up by office developer KPG Funds, The Real Deal reported. Vornado has said the sale of the Soho properties is expected to close in the first quarter of 2022.

The Upper East Side stretch of Madison Avenue has long been one of Manhattan’s most expensive shopping districts, known for sky-high rents and luxury brands. But the pandemic-driven downturn accelerated the troubles of street-level retail stores, and landlords have taken a big hit. Most recently, Ashkenazy Acquisition lost its retail building at 690 Madison Avenue to SL Green Realty through a UCC foreclosure.