Vornado affiliate’s Bloomberg HQ at 731 Lexington faces mortgage troubles

$500M loan comes due in June, Fitch lowers to “negative” outlook

Fitch Lowers Outlook on Vornado Affiliate’s Bloomberg Tower
Vornado Realty Trust’s Steven Roth, 731 Lexington Avenue (Vornado, Getty)

The Bloomberg Tower in Midtown East has picked up a detractor as it faces down a key deadline.

Fitch Ratings lowered the outlook on a mortgage attached to 731 Lexington Avenue, Crain’s reported. The property is owned by Alexander’s Inc., an affiliate of Roth’s Vornado Realty Trust, and the mortgage is set to mature in June.

Unlike some office buildings facing financial uncertainty in Manhattan, occupancy isn’t a concern at the property, where Bloomberg LP occupies virtually all of the office space through 2029. Two years ago, Bloomberg shored up its position at the building by leasing 900,000 square feet at $132 per square foot.

The concern is instead a $500 million mortgage, originated in 2017. At the time, the debt paid the existing $300 million mortgage issued in 2014 by Deutsche Bank on the office portion of the property. The 2017 loan carried a floating interest rate.

That’s created significant complications. In only the last two years, the rate has risen from 1.4 percent to 6.2 percent, according to KBRA data, and there are fears Vornado won’t be able to land the extension it seeks.

“The outlook reflects the possibility of a downgrade in the event the borrower and servicer are unable to agree upon extension terms,” Fitch said, changing its outlook to “negative.”

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Both Vornado and Bloomberg declined to comment.

Bloomberg’s global headquarters occupy most of the property, which opened in 2004, but there’s also residential space on the top floors of the 57-story, 1.1 million-square-foot tower. 

Vornado acquired the parcel in the 1980s by buying up the stock of Alexander’s, which operated a department store there.

Donald Trump also made a play for the site before being bested by Roth. The lot sat vacant and blighted for many years, a ploy that Roth later said was an intentional move to land more financial incentives for development from the city.

Holden Walter-Warner

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