Vornado Strikes Back

Steve Roth’s Vornado is back. And thanks to Donald Trump.

Mr. Roth has purchased for $1.81 billion a majority stake in 1290 Avenue of the Americas and a San Francisco building from a group of investors led by Mr. Trump.

Vornado will take a 70 percent majority stake at 1290 A of A, a 1.9-million-square-foot building between 51st and 52nd streets. He purchased his share at $775 per square foot, and this deal puts the building’s value at $1.55 billion. Mr. Trump and his partnership, Hudson Waterfront Assocates, paid $1.2 billion for the building last year.

It was Mr. Roth’s Vornado that lost in a bidding war to Blackstone for Equity Office Properties in February. And then Mr. Roth lost even bigger to Harry Macklowe when Blackstone sent eight of Equity Office’s former Manhattan buildings to Macklowe Properties for $7 billion.

Now, Mr. Roth has a new 2-million-square-foot building on Sixth Avenue to serve as a good, quick and needed pick-me-up.

Full release after the jump.

- John Koblin

MARCH 16, 2007

Vornado to Acquire 70% Controlling Interest in 1290 Avenue of the Americas and 555 California Street

PARAMUS, NEW JERSEY…..Vornado Realty Trust (NYSE:VNO) today announced that it has entered into an agreement to acquire a 70% controlling interest in 1290 Avenue of the Americas, a 2.0 million square foot Manhattan office building, located on the entire blockfront between 51st and 52nd Streets on Avenue of the Americas, and the 555 California Street office complex containing 1.8 million square feet, known as the Bank of America Center, located at California and Montgomery Streets in San Francisco’s financial district. 1290 Avenue of the Americas, whose largest tenants include AXA, Morrison & Foerster, Bryan Cave and Microsoft, is 100% leased. 555 California Street, whose largest tenants include Bank of America, UBS and Goldman Sachs, is 94% leased.
The purchase price for Vornado’s 70% interest in the real estate is approximately $1.807 billion, consisting of $1.010 billion of cash and $797 million of existing debt. Vornado’s share of the debt is comprised of $308 million secured by 1290 Avenue of the Americas and $489 million secured by 555 California Street. The preliminary allocation of the purchase price is approximately $775 per square foot for 1290 Avenue of the Americas and approximately $575 per square foot for 555 California Street, based on current measurement of the buildings.

Vornado’s 70% interest is being acquired through the purchase of all of the shares of a group of foreign companies that own, through U.S. entities, the 1% sole general partnership interest and limited partnership interests comprising 69% of the partnerships that own the two properties. The remaining 30% limited partnership interest is owned by Donald J. Trump.

In August 2005, Mr. Trump brought a lawsuit in the New York State Supreme Court against, among others, the general partners of the partnerships referred to above. Mr. Trump’s claims arose out of a dispute over the sale price of, and use of proceeds from, the sale of properties located on the former Penn Central rail yards between West 59th and 72nd Streets in Manhattan which were formerly owned by the partnerships. In decisions dated September 14, 2005 and July 24, 2006, the Court denied various of Mr. Trump’s motions and ultimately dismissed all of Mr. Trump’s claims, except for his claim seeking access to books and records, which remains pending. Mr. Trump has sought reargument and renewal on, and filed a notice of appeal in connection with, his dismissed claims. Vornado has agreed to indemnify the sellers in this transaction for certain of their liabilities and expenses arising out of Mr. Trump’s claims.

This acquisition is expected to close in the second quarter of 2007, subject to customary closing conditions.

Vornado Realty Trust is a fully-integrated equity real estate investment trust.