Vornado Lands $450M to Refinance Penn 11

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Steve Roth refinanced one of his Penn District properties, but needed to contribute his company’s equity to do so.

Vornado Realty Trust landed a $450 million CMBS loan for Penn 11, Bisnow reported. The real estate investment trust announced the deal on Wednesday, disclosing the five-year interest-only loan has a fixed rate of 6.35 percent and isn’t set to mature until August 2030.

Citi Real Estate Funding, Bank of Montreal and Societe Generale Financial Corporation provided the debt, according to presale reports from Moody’s Ratings and Morningstar DBRS.

But Vornado was facing an October maturity of $500 million in debt at the 1.2-million-square-foot office property. To close the gap, Vornado chipped in $50 million of equity.

Vornado did not comment further on the refinancing.

In the fall, Apple quietly expanded by 61,000 square feet at Penn 11, bringing its footprint at the Midtown South property to 460,000 square feet. The deal was for some of the space leased to Macy’s, which still operates its headquarters from the property.

All of Apple’s space is leased through 2035. Sparc Group is another major tenant, subleasing 182,000 square feet, while AMC Networks leases 324,000 square feet for its headquarters, though it will likely pare down by a couple of floors when its lease comes due in November, according to Morningstar and Moody’s.

Asking rents at the building are around $85 per square foot. As of March, the building was 97 percent occupied, according to Morningstar.

Vornado purchased Pen 11 in 1997 along with 2 Penn Plaza in a $437 million portfolio deal with the late Bernard Mendik. The seller converted his position into shares in Vornado’s real estate investment trust.

The 26-story building was designed by Starrett & Van Vleck and completed in 1923. It has been renovated over the years to achieve LEED Gold certification.

The Penn District has been a mixed bag for Vornado lately. Last month, Samsung signed a 10-year lease for 35,000 square feet at Penn 1, bringing its footprint in the tower to 71,000 square feet.

But Roth is struggling to get a redevelopment of Penn 15 off the ground, saying it needs to reach rents of around $200 per square foot for the project to pencil out.

— Holden Walter-Warner