Vornado, Kushner JV to Recap NYC's 666 Fifth Ave.

December 19, 2011
By Barbra Murray, Contributing Editor

Image courtesy Wikipedia user David Shankbone

A new co-owner steps in at 666 Fifth Avenue, a 1.5 million-square-foot office tower in Manhattan, as Vornado Realty Trust establishes a joint venture with an affiliate of the Kushner Cos., the current owner, to recapitalize the office segment of the premier property. The transaction gives Vornado a 49.5 percent stake in the asset, and leaves Kushner to hold onto the remaining 50.5 percent interest.

The transaction also allowed for the conversion of the current $1.2 billion mortgage to a $1.1 billion A-Note coupled with a $115 million B-Note. Additionally, Vornado and Kushner will throw in a respective 80 million and $30 million to the joint venture to finance tenant improvements and provide working capital for the 39-story building.

Lenders have warmed up to the Manhattan commercial real estate market to such a degree that it almost seems like the credit crunch never had its grip on the city. Last month RBC Capital Markets came through with a $115 million adjustable-rate loan for the refinancing of 980 Madison Ave, a 130,500-square-foot mixed-use property. In October, MetLife Inc. revealed it had provided a $350 million, five-year, fixed-rate mortgage for the office condominium unit at the 907,000-square-foot Bertelsmann Building at 1540 Broadway. And acting as the lead lender on a $725 million loan for the 1.6 million-square-foot office and retail asset at 601 Lexington Ave., MetLife supplied $375 million.

Buyers and lenders alike have taken a great interest in Manhattan this year and 666 Fifth has benefited on both sides. In March, a 38,750-square-foot retail condominium space at the high-rise fetched $324 million, when a joint venture consisting of the Carlyle Group, Crown Acquisitions and Kushner Cos. sold the space to Spain’s Inditex Group.