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Vornado & Trump Refinance 1290 Avenue of the Americas

November 28, 2012
The Vornado Realty Trust partnership completed a $950 million refinancing of 1290 Avenue of the Americas, a 2.1 million-square-foot Manhattan office building. The 10-year interest-only loan bears interest at 3.344%. The net proceeds from the refinancing were $522 million after repaying the existing loan and closing costs.

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The new loan on the property is being rolled into a single-entity commercial mortgage backed securities: VNDO 2012-6AVE.

The building currently is 97.4% occupied by 30 tenants that have a weighted-average remaining lease term of about eight years. The largest tenants are AXA Equitable, leasing 20.2% of NRA, Bryan Cave, with 10.2%, and Warner Music, with 8.3%. Other notable tenants are Microsoft, Cushman & Wakefield, and Columbia University.

Investment grade tenants generate roughly 45% of the property’s base rental revenue. The equity owners of the property have not secured mezzanine financing. However, the loan agreement allows for future mezzanine debt, subject to certain conditions including thresholds for debt service coverage ratio (DSCR), debt yield, loan-to-value (LTV), and total mezzanine debt.

Vornado acquired its 70% controlling interest in the property in 2007. The Trump Organization owns the remaining 30% interest.

Separately, Vornado also completed a $120 million refinancing of 4 Union Square South, a 206,000-square-foot Manhattan retail property. The 7-year loan bears interest at LIBOR plus 2.15% and amortizes based on a 30-year schedule beginning in the third year. The net proceeds from the refinancing were $42 million after repaying the existing loan and closing costs.

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