Vornado Plans $400M Buyback of Senior Notes

NEW YORK CITY-Looking to reduce its outstanding debt load, Vornado Realty Trust said Thursday it has commenced cash tender offers for $404.5 million worth of convertible senior debentures. The REIT says it will buy back any and all of its $382,046,000 principal amount of outstanding 3.625% notes due 2026 and its $22,479,000 principal amount of outstanding 2.85% notes due 2027, at a purchase price of $1,020 per $1,000 for the ’26 notes and $1,015 per $1,000 for the ’27 notes.

Goldman Sachs is acting as deal manager for the debt buyback. The tender offers will expire at midnight on Sept. 30.

Vornado’s tender offer comes a week after the City Council gave formal approval to the rezoning of what would become the development site for 15 Penn Plaza, an office tower that would be built where the Hotel Pennsylvania currently sits. The REIT’s proposed project had its detractors, including the ownership of the Empire State Building, which is located about 1,000 feet northeast.

Earlier in August, a Vornado subsidiary sold $660 million of 10-year mortgage notes in a single-issuer securitization. The six notes are comprised of a $600-million fixed-rate component and a $60-million variable-rate component, and are cross-collateralized by 40 strip shopping centers located mainly in the New York metro area.

At the end of July, Vornado announced a 26.2% equity investment in LNR Property Corp. The recapitalization, which also involved iStar Financial, Cerberus Capital Management and Oaktree Capital Management, entailed an influx of $417 million in new equity and the reduction of LNR’s debt load from $1.3 billion to $425 million.