National March 16, 2007 E-mail this article
Print this article Written by Jillian Ambroz Vornado Strikes $1.8 Billion Bi-Coastal Blockbuster REIT Acquires Majority Interests in 1290 Ave. of the Americas in NY and Bank of America Center in San Francisco Blackstone who? Vornado Realty Trust (NYSE: VNO) has finally found a place to park the $2 billion in cash it has been itching to spend over the last year or so. The Paramus, NJ, REIT has struck a bi-coastal deal to acquire a majority stake in two prominent office towers in New York and San Francisco.
Vornado will acquire a 70% controlling interest in the nearly 2 million-square-foot property at 1290 Avenue of the Americas in Manhattan and the three-building, 1.8 million-square-foot Bank of America Center office complex at 555 California St. in San Francisco.
The deal breaks down to a little more than $1 billion in cash and the assumption of $797 million of existing debt. The New York property serves as collateral for a mortgage totaling $440 million and $698 million backed by the San Francisco property. Vornado will assume 70% of those mortgages as part of the deal.
The transaction values the properties at a total of about $2.58 billion, according to CoStar Group's back-of-envelope calculations. The New York property, based on a price per square foot of $775, would be valued at $1.55 billion in the current deal. The San Francisco complex, which Vornado is paying $575 per square foot to acquire, would be valued at $1.03 billion.
Vornado is buying the majority stakes in both buildings from a consortium of Hong Kong investors known as Hudson Waterfront Associates that had partnered with Donald J. Trump on several deals. Trump will retain his 30% limited partner interest.
The relationship between Hudson Waterfront Associates and Trump turned soured and Trump sued the group of investors in 2005 claiming the $1.76 billion sale of several residential properties on the former Penn Central rail yards between West 59th and 72nd streets in Manhattan was done at below-market rates.
All but one of Trump's claims were dismissed by the courts. His request seeking access to books and records is still pending. Vornado has agreed to indemnify the sellers in this transaction of certain liabilities and expenses in relation to the ongoing legal issues with Trump.
Following the sale of the Riverside South properties, the investor group re-invested proceeds into the 43-story building at 1290 Avenue of the Americas as part of a 1031 exchange. The group bought the building, also known as Axa Financial Center, for $1.2 billion or $634.64 per square foot. Jamestown Associates sold the property.
Vornado is paying about $775 per square foot for its stake in the property, which sits between 51st and 52nd streets. Rents at the fully leased building go for an average of $49 per square foot, according to CoStar Group information.
Vornado will pay about $575 per square foot for its stake in Bank of America Center. Hudson Waterfront Associates paid slightly more -- about $1.05 billion or $589.64 per square foot -- to acquire the 1.4 million-square-foot tower at 555 California St., along with two smaller buildings at 315 and 345 Montgomery streets, from a New York investment group led by David Werner and Mark Karasick last year, also in a 1031-exchange.
Douglas Harmon of Eastdil Secured brokered the previous sales of both properties. It could not be learned if he orchestrated this latest deal; calls to Harmon were not immediately returned.
The deal is expected to close by May 15, 2007.
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National Commercial Real Estate News Feed Learn more about the featured properties in this news story: 1290 Avenue of the Americas
555 California St
315 Montgomery St
The Bank of America Center San Francisco from street level.
Vornado Realty Trust of Paramus NJ has completed a deal to take a majority interest in the 1.8 million sq ft building at 555 California St in San Francisco, (aka The Bank of America Center) and the 2 million sq. foot building located at 1290 Avenue of The Americas in New York City. 

In an announced deal worth $1.8 billion, the new investors get a 70 percent interest in both towers, alleviating the current owners, Hudson Waterfront Associates of any possible liability in a lawsuit brought against them by Donald Trump. 

Built in 1969, 555 California is SF's largest office tower, and 2nd tallest building at 779 ft. just a few feet shy of the 48 story Transamerica Pyramid at 853 ft which was completed in 1972.

The SF structure, whose current deal estimates it's value @ $575 per sq ft, had just sold last year for $1.05 Billion all by itself ($583 a sq ft), when property magnate Walter Shorenstein sold it to Henry Cheng and Vincent Lo's Hong Kong based Hudson Waterfront Associates, a record for a city property. 


Before 2005, 555 California had been Bank of America's World HQ, but that status ended when North Carolina based NationsBank ate up A.P Giannini's west coast banking legacy and kept the B of A name, but made the main HQ in Charlotte NC. 

For lookee loos the 52nd floor of 555 California features the popular Carnelian Room, a hang for well to do bankers, brokers, lawyers and tourists checking out wide sweeping views from what was once the tallest structure west of the Mississippi, now only the 5th Tallest Bldg on the west coast, but still impressive. For those afraid of heights and the tab for "fine dining", the ground floor also features a Starbucks.