Vornado Realty Trust remains busy this year in putting together commercial deals in Manhattan. The latest involves the REIT's retail property 4 Union Square South, which has completed a $120 million refinancing.
The new loan will carry a 5.64 percent fixed interest rate, with a 10-year term. It will replace the existing $120 million loan, which maintained a 5.85 percent rate, as of August 11, and was set to mature this month.
The move continues on Vornado's activity across its CRE portfolio. In July, the company refinanced its 1.2 million square foot PENN 11 office for $450 million, after the asset recently underwent renovation. A month earlier, Vornado, along with its joint venture partner Stellar Management, struck a $675 million deal to refinance their Independence Plaza residential property in Tribeca. Another involved Vornado's hotel property, Marriott Marquis, where it landed a $450 million loan, which is being used in part to redeem the company's preferred equity in the asset's JV. Additionally, in May, Vornado acted on the selling front and said goodbye to a Chelsea office asset for $205 million.
As of June, the firm reported that occupancy across its portfolio averaged 85.2 percent, according to its second-quarter financial report.
When 4 Union Square was originally built in the 1970s, the property served a single tenant department store. That was until Vornado redeveloped the site into a 200,000 square foot multi-tenant retail building in 2005. Now, the location hosts major brands including Whole Foods Market, DSW and Burlington. Plus, 4 Union Square is in proximity to New York University.
The refinancing comes at a time when fundamentals look favorable for retail in The Big Apple. A second-quarter report from JLL found that sector availability in prime NYC dropped to a record low, which dates back to the third quarter of 2017. Also, retail rents in the area surged by 11 percent year-over-year to an average of $608 per square foot, which is the highest level seen in five years.
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