Vornado Realty Trust Completes $3.2B in Refis
Refi includes 2 NYC office buildings encompassing 2.2M SF, credit extensions to increase REIT’s cash flow.
Vornado Realty Trust has completed four refinancing deals totaling $3.2B, replacing loans for two Manhattan office buildings encompassing a total of 2.2M SF and extending the terms of a revolving line of credit and an unsecured term loan.
More than a dozen banks were involved in the refinancing deals, including JPMorgan Chase, Bank of America, US Bank, Well Fargo, Citigroup, Deutsche Bank and TD Securities.
The REIT secured $480M from US Bank to refinance 100 W. 33rd St. in the Chelsea neighborhood of Manhattan, a building Vornado acquired in 2007—when it was known as Manhattan Mall—for $689M.
The interest-only loan obtained from US has a June 2027 maturity date and two one-year extension options, with a rate of SOFR plus 1.65% through March 2024, growing to SOFR plus 1.85% for the remaining term. The deal replaces a $580M loan that had an interest rate at LIBOR plus 1.55%.
The property on 33rd St. currently includes 859K SF of office space and about 255K SF of retail. It is part of Vornado’s PENN District project, an office campus surrounding Madison Square Garden and the Moynihan Train Station that includes 10M SF of office space, with plans for an additional 5M SF.
The REIT also secured a $700M loan to refinance a Class A office building at 770 Broadway in the East Village. The building is anchored by Meta, which increased its footprint there by 300K to a total of 1.1M SF in April.
The interest-only $700M loan, set at SOFR plus 2.25% with a maturity date of July 2027, includes terms that allow Vornado to draw an additional $300M within 18 months at a rate decrease to SOFR plus 1.75%. The financing replaces a loan with a rate of SOFR plus 1.85% that Morgan Stanley originated in 2016.
Despite downgrades in recent months from ratings agencies, Vornado fully extended an unsecured credit facility of $1.25B from March 2024 to December 2027 at an interest rate of SOFR plus 1.15%. The REIT also extended an $800M unsecured term loan from February 2024 to December 2027 at a rate of SOFR plus 1.3%.
Citing Manhattan’s high office vacancy rates, Fitch earlier this year downgraded the Issuer Default Ratings for Vornado to BBB- while Moody’s in April downgraded the REIT’s senior unsecured debt rating to Baa3 and its preferred stock rating to Ba1.
Vornado also has been undertaking strategic divestitures to increase its dry powder for new investments. The REIT recently completed the sale of the Center Building, a 498K SF property on Northern Boulevard in Long Island City, for $172.8M.