Vornado Prices $750M in Green Bonds

Vornado Realty Trust has priced an offering of $750 million in green bonds.

The net proceeds of approximately $743 million, which is expected to close on May 24, 2021, are intended to be allocated to eligible green projects. Pending that allocation, Vornado says the net proceeds are slated to be used for the repayment of the $675 million mortgage on theMART.

Formerly known as The Merchandise Mart, theMART is the largest privately held commercial building in the US. The 25-story, 4.2-million-square-foot property spans two city blocks. In 2018, The Center for Active Design announced that theMART achieved a Fitwel 2 Star Rating, which recognized the property’s ability to support the physical, mental, and social health of its occupants.

This is Vornado’s second green bond offering. In June 2014,  it made its initial $450 million green bond offering.

Vornado issued the $400 million bond through 2.15% senior unsecured notes due on June 1, 2026. The $350 million bond issued through 3.40% senior unsecured notes is due June 1, 2031.

Interest on the notes will be payable semi-annually on June 1 and December 1, beginning on December 1, 2021. Vornado says the 2026 notes were priced at 99.863% of their face amount to yield 2.179%, and the 2031 notes were priced at 99.587% of their face amount to yield 3.449%.

Lately, several REITs have been turning to green bonds as they tap the capital markets. 

In March, Boston Properties issued its third green bond, pricing the offering at $850 million and announcing the redemption of all outstanding shares of its 5.25% Series B preferred stock.

Boston Properties issued the bond through 2.550% senior unsecured notes due in 2032 in an underwritten public offering through BofA Securities, Deutsche Bank Securities, J.P. Morgan Securities, Morgan Stanley & Co. and TD Securities (USA) as joint book-running managers. The notes were priced at 99.570% of the principal amount to yield 2.595% to maturity. 

In May, WashREIT expanded its green bond framework with $350 million in green bonds for eligible properties. The REIT will target BREEAM In-Use Very Good certifications for the assets, including an eight-property apartment portfolio that WashREIT acquired in 2019.

“ESG is integrated into our mission and goals for the company as a whole, and we really have to live it in our operations and adopt it in all that we do for our stakeholders, both our investors and our residents,” Steve Riffee, CFO at WashREIT, told GlobeSt.com. “To be responsible stewards of our investors’ capital, we believe that aligning our ESG objectives with investors that really value ESG is the right thing to do.”