Vornado selling FiDi office building at discount as interest rates rise

David Werner in contract to buy 29-story 40 Fulton Street for $105M to $110M

Vornado Realty Trust's Steve Roth and 40 Fulton Street (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Vornado)
Vornado Realty Trust's Steve Roth and 40 Fulton Street (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Vornado)

Steven Roth’s Vornado Realty Trust is selling a Financial District office building for about 20 percent less than what it was asking in the spring — a haircut that reflects how the rising cost of debt is hindering commercial property sales.

The Steven Roth-led REIT is in contract to sell its 29-story office building at 40 Fulton Street to investor David Werner for between $105 million and $110 million, sources told The Real Deal.

That’s a notable discount on the $130 million to $140 million Vornado was eyeing when it put the property up for sale in May. Vornado lowered its pricing on the building as rising interest rates made acquiring it more costly for potential buyers, according to a person familiar with the deal. The 250,000-square-foot building is about 80 percent leased.

A Vornado spokesperson declined to comment and Werner did not immediately respond to a request for comment.

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The deal was brokered by a Newmark team led by Evan Layne and Brett Siegel, who did not immediately respond to a request for comment.

Vornado put the 1980s-era building up for sale as part of a broader move to trim older, less-profitable parts of its portfolio, including office and retail properties.

Company president Michael Franco said during its first-quarter earnings call that 40 Fulton is “a fine building, but that’s not an asset that we think is consistent, where we want to own in five [or] 10 years.”

Vornado bought the building in 1998 and completed a $15 million renovation in 2019. It has signed tenants to about 110,000 square feet of leases there since the start of the pandemic. The building’s largest tenant is Fortune Media, which accounts for about 20 percent of its leasable area.