A rendering of the new $1.6-billion Penn-Farley complex.

NEW YORK CITY—Vornado Realty Trust has reported some financial terms of last Friday's closing on the Farley Post Office project at Penn Station with joint venture partner Related Companies.

The New York City-based REIT reports that in connection with the completed 99-year lease for the commercial space at the Farley Post office building with the state's Empire State Development Corp., the Vornado-Related joint venture has made a $230-million upfront contribution to the construction of the Moynihan Train Hall.

Simultaneously, the joint venture completed a $271-million loan facility, with an initial advance of $202 million. The interest-only loan is at LIBOR plus 3.25%, currently 4.41%, and matures in June 2019, with two one-year extension options. The Farley Building is located on the double block bounded by 8th and 9th avenues and 31st and 33rd streets, across the street from Penn Station and Madison Square Garden.

Last Friday, Gov. Andrew Cuomo announced the state had finalized a deal for the $1.6-billion Penn-Farley complex project.

The Farley Building redevelopment into the Moynihan Train Hall will create a new 255,000-square-foot train hall for Long Island Railroad and Amtrak passengers and increase Penn Station's total concourse floor space by more than 50%. The train hall is being named after long-transportation advocate—the late U.S. Sen. Daniel Patrick Moynihan.

The project is being funded with $550 million from New York State, a combined $420 million from Amtrak, the MTA and the Port Authority of New York & New Jersey and federal grants, and $630 million from the joint venture development team of Related, Vornado and Skanska.

The Vornado-Related venture will develop 850,000 square feet of commercial space, comprised of approximately 730,000 square feet of office space targeting creative class tenants (with 32-foot by 40-foot column spacing and more than 17-foot ceiling heights) and approximately 120,000 square feet of retail space. The project adds to Vornado's 9-million-square-foot Penn Plaza holdings.

The 50-50 joint venture has entered into a development agreement with Empire State Development and has agreed to a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall with Vornado and Related each guaranteeing the joint venture's obligations. Under the design-build agreement, Skanska will fulfill all of the joint venture's obligations. The obligations of Skanska Moynihan Train Hall Builders has been bonded by Skanska USA and bears a full guaranty from Skanska AB, Vornado Realty reports.

Gov. Cuomo said in a conference call last week that construction of the project has already begun. The state forwarded some funds to get work started as Empire State Development was finalizing the joint venture agreement. An official groundbreaking will be scheduled at a future date.

He said the completed project will be one of the great attractions in New York City and will have “a grander hall than Grand Central Terminal.”

Noting that more commuters pass through Penn Station than LaGuardia, Kennedy and Newark airports combined. Gov. Cuomo added that the redeveloped and expanded Penn Station will serve as the “front door” for many as they first enter New York City.

Instant Insights /

Update: Vornado Reveals Financing Details on Farley Post Office Project

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