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No cash-out this time for Vornado and the Trump Organization.
The companies have refinanced their 2.1 million-square-foot office tower at 1290 Sixth Avenue with a $950 million loan led by JPMorgan, the proceeds of which will go entirely to replacing current debt, according to a review by Fitch Ratings.
In April, Vornado and the Trump Org extracted $617 million in equity from their San Francisco office tower following a $1.2 billion refinance, also provided by JPMorgan.
Vornado, which owns a 70 percent stake in the properties, tried selling both last summer, but suspended those efforts a few months later when it could not find a buyer at a price it wanted.
Ratings documents associated with the CMBS loan provide an inside look at the property’s finances. Today, the tower is 98 percent occupied by 25 tenants, with subleases accounting for a quarter of the filled space.
The largest tenant in the building, AXA Equitable Life Insurance, is leaving. Its lease on approximately 423,000 square feet of space will expire in 2023 (the remaining 57,700 square feet expires in 2030). The firm currently subleases about 288,000 square feet of its space in the building and plans to relocate to the Fisher Brothers’ 1345 Sixth Avenue.
Private equity firm Neuberger Berman occupies nearly as much space as Equitable Life and has invested about $50 million into improvements, with a lease that runs through 2037, according to Fitch Ratings.
The ten largest tenants make up about 90 percent of rentable area in the building with a weighted average lease term of 8.4 years.
The most recent post-pandemic office tenant, live sports streaming service Fubo TV, will pay $75 per square foot, nine percent less than the current weighted average rent of almost $83 per square foot. The firm agreed to a 14-year lease in the tower last month.
Other tenants include Cushman & Wakefield, SSB Realty, Wenner Media, Columbia University and the law firms Venable and Bryan Cave.
Even as remote work dampens office property values, Fitch noted that premium towers like 1290 Sixth Avenue, which has seen $40 million in redevelopment since 2015, will face less severe effects than lower-quality buildings.