The 1,328-unit Independence Plaza complex in Tribeca was originally part of the Mitchell-Lama program.

NEW YORK CITY-Vornado Realty Trust said late Friday it had acquired a 58.75% interest in Stellar Management‘s Independence Plaza rental apartment complex in Manhattan’s Tribeca neighborhood. The acquisition completes a transaction that began in June 2011, when the REIT bought a 51% interest in the junior debt on the complex at a discount.

The current transaction values the 1,328-unit complex at $844.8 million, according to Vornado. The property is now encumbered by a $329.2-million mortgage. Vornado and Stellar expect to refinance the complex in the first quarter of 2013, according to a release.

Vornado says it acquired its 58.75% interest in the 40-year-old complex as follows: buying one of the equity partner’s 33.75% interest for $160 million, exercising its warrant to purchase 25% of the equity for $1 million and contributing the appreciated value of its interest in the subordinated debt as preferred equity. Vornado took its 51% interest in the subordinated debt, which the Wall Street Journal reported in June ’11 at $185 million, for $45 million, acquiring the 25% warrant at the same time.

Stellar had bought Independence Plaza in 2003, when it was still part of New York State’s Mitchell-Lama program subsidizing middle-income housing. The company removed the complex from Mitchell-Lama and took out $575 million in loans as it renovated apartments with the goal of marketing them as luxury rentals, according to the WSJ.

“As was the case for many projects conceived at the market’s peak, the buyers’ revenue projections fell short while the property’s value fell below the value of the total debt,” the WSJ reported in June ’11. The newspaper reported at the time that the junior-debt sale was arranged by Doug Harmon and Adam Spies of Eastdil Secured.

Vornado now manages the retail space at the complex, while Stellar will continue to manage the residential units, the release states. Due to contributing the debt for preferred equity and exercising its warrant, Vornado recognized a $100-million net gain for financial statement purposes in the fourth quarter.