Vornado Realty Trust stands to earn $425 million in cash from a loan against its theater, shops, restaurants and a soaring billboard over Times Square.
The city’s second-largest commercial landlord took out a $450 million loan backed by 100,000 square feet of retail stores, the 1,600-seat Marquis Theater and a six-story billboard at 1535 Broadway, also home to the New York Marriott Marquis hotel, Crain’s New York Business reported.
The lender behind the five-year loan at a 6.3 percent interest was not reported. The property previously had no debt attached to it, according to KBRA.
Vornado will rake in $425 million after closing costs and more, boosting the developer’s cash on hand by 40 percent. The real estate investment trust declined to comment to Crain’s.
“Companies are more focused on retaining cash given the turmoil in the market,” Alexander Goldfarb, a real estate analyst at Piper Sandler, told the outlet. “Having more is better than less.”
Vornado has watched its stock price fall by 20 percent in six months because investors fear a slowing economy will cut demand for offices.
Economic activity “contracted modestly” in New York over the past month, the Federal Reserve said in a report, as “heightened uncertainty weighed on businesses and consumers.”
Vornado entered the year with nearly $1 billion in cash, which was $300 million less than a year ago because of sagging rental income and rising expenses. In 2023, the developer cut its dividend payout by two-thirds.
The uncertainty could complicate Vornado’s plans to lease up Penn 2, a 1.8 million-square-foot tower next to Penn Station that’s the subject of a $750 million renovation.
Vornado isn’t the only Times Square landlord girding against economic headwinds.
Host Hotels & Resorts, the Maryland-based owner of the Marriott Marquis hotel, recently filed to raise up to $600 million by selling shares, according to the publication.— Dana Bartholomew
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