Vornado Realty Trust’s sale of the 29-story office building at 40 Fulton Street hit property records Wednesday, concluding a case study on how interest rates can affect a commercial transaction.
Investor David Werner purchased the Financial District building for $101 million, well below the $130 million to $140 million Vornado sought for the 251,000-square-foot building upon putting it on the market last spring.
The financing for the acquisition is also notable. Two relative unknowns in the New York office market, UMB Bank and the Bank of New Hampshire, provided loans of $45 million and $25 million, respectively, according to public records. The former was listed as a trustee in its lending agreement.
Vornado disclosed in August that it had agreed to sell the property for $102 million, good for a $33 million profit for Steve Roth’s real estate investment trust.
Read more
Commercial
New York
Vornado puts FiDi office building on the market as it trims portfolio
Commercial
New York
Vornado selling FiDi office building at discount as interest rates rise
Commercial
New York
Rising interest rates weighing on Vornado’s earnings, Steve Roth says
The $101 million sale works out to $402 per square foot.
Vornado lowered the asking price on the building as rising interest rates made acquisitions more difficult for prospective buyers. The building was approximately 80 percent leased when Werner agreed to buy it.
A Newmark team led by Evan Layne and Brett Siegel brokered the deal. Vornado did not immediately respond to a request for comment, and Werner could not be reached.
Vornado purchased the building in 1998 and completed a $15 million renovation in 2019. Since the start of the pandemic, tenants have leased approximately 110,000 square feet at the property. Fortune Media accounts for 20 percent of the leasable area, the most of any tenant.
Roth’s REIT has been looking to trim the older and less profitable parts of its portfolio, particularly office and retail properties; 40 Fulton was built in the 1980s.