Think of this as our little thank you for nabbing Ken Griffin.
On the one hand, the market is “not at all conducive to ground-up development,” in the words of Vornado Realty Trust CEO Steve Roth. On the other, an office tower planned for 350 Park Avenue already has an anchor tenant, Griffin’s Citadel. Isn’t that worth a little treat for Vornado’s leaders?
The real estate investment trust’s board certainly thought so.
Vornado’s board signed off on $6.4 million in bonuses to Vornado executives as a reward for their deal with Rudin Management and Griffin that will pave the way for the 1.7 million-square-foot tower. In January, Vornado and Rudin finalized agreements for Griffin to master lease 350 Park Avenue and 40 East 52nd Street. Later, Vornado and Rudin bought an adjacent property to add to the development site.
A filing with the Securities and Exchange Commission explained that the bonuses were a reward to management for “seeking and finding new opportunities to create shareholder value by raising third-party capital for development projects to diversify risk and enhance the Company’s economics.” H/T to my colleague Christian Bautista for flagging the filing.
Roth received $2.2 million, and president and CFO Michael Franco got $1.4 million.
If you are thinking this may not be good for investor relations as office REITs struggle and the office market faces an existential crisis, you are on the same wavelength as some analysts.
“The optics of creating a new…bonus pool when earnings continue to decline doesn’t look good in our view,” Alexander Goldfarb, an analyst at Piper Sandler, told Crain’s. That said, Vornado stock is up 40 percent this year and is back to its pandemic plunge point of March 20, 2020. (A month before that crash, it was worth more than twice as much.)
The $6.4 million payout was taken from a $25 million installment of development fees related to 350 Park. Most recently, the development team agreed to buy up to $164 million worth of air rights for the project from the Roman Catholic Archdiocese of New York.
What we’re thinking about: Developers broke ground on the first phase of the massive WIllets Point project this week. Will phase two, which includes a 25,000-seat soccer stadium for the New York City Football Club and 1,400 more affordable housing units, move forward? Send a note to kathryn@therealdeal.com.
A thing we’ve learned: “Hi ho! Kermit the lizard-thing here.” The original Kermit the Frog puppet was made from an old green coat owned by Jim Henson’s mother and a pair of Henson’s blue jeans, according to the Smithsonian. This early Kermit had ping pong balls for eyes and looked more lizard-like than amphibian.
Programming note: The Daily Dirt will take a holiday break on Dec. 22 and return Jan. 2. In the meantime, keep an eye out for two end-of-year editions of the newsletter.
Elsewhere in New York…
— The United Federation of Teachers is suing Mayor Eric Adams to stop $2 billion in funding cuts to city schools, Politico New York reports. “The administration can’t go around touting the tourism recovery and the return of the city’s pre-pandemic jobs, and then create a fiscal crisis and cut education because of its own mismanagement of the asylum seeker problem,” union president Michael Mulgrew said in a statement.
— The city paid NYPD officers $155 million for working overtime in the subway system this year, Gothamist reports. That is up from $4 million in 2022. More than 1,000 additional officers patrolled the subway every day this year, adding to the 2,500 in the NYPD’s transit bureau. This year, 48 fewer serious crimes, including murder, rap and robbery, were reported than in 2022, a 2 percent decrease. Assaults increased from 505 to 531, a 5 percent jump. Officers made 1,900 more arrests than last year and issued 34,000 more summonses related to fare evasion, representing increases of 250 percent and 160 percent, respectively.
— Former Mayor Rudy Giuliani on Thursday filed for bankruptcy protection after being hit with a $148 million judgment, the New York Daily News reports. Last week, a judge ordered Giuliani to pay that to two Atlanta election workers he defamed by repeatedly claiming fraud cost President Donald Trump the 2020 election.
Closing Time
Residential: The priciest residential closing Thursday was $5.7 million for a home at 131 Lincoln Place in Park Slope.
Commercial: The most expensive commercial closing of the day was $57 million for a 129-square-foot distribution building at 58-95 Maurice Avenue in Queens.
New to the Market: The priciest residence to hit the market Thursday was a co-op at 730 Park Avenue asking $28 million. Douglas Elliman has the listing.
Breaking Ground: The largest new building filing of the day was for a 4,600-square-foot, two-family building at 1562 Richmond Road, Staten Island. Stanley M. Krebushevski filed the permit application.
— Jay Young