Subsequent Events

3 Months Ended

Mar. 31, 2025

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

1535 Broadway (Fifth Avenue and Times Square JV)

On April 14, 2025, the Fifth Avenue and Times Square JV completed a $450,000,000 financing of 1535 Broadway. The interest-only non-recourse loan bears interest at a fixed rate of 6.90% and matures in May 2030. After transaction costs and reserves, $407,000,000 of the net proceeds from the financing were used to partially redeem Vornado’s Fifth Avenue and Times Square JV preferred equity. In connection with the financing, the annual coupon for the remaining preferred equity interest in 1535 Broadway was increased to 5.75% from 4.75% through the maturity of the new loan and then will be based on a formulaic rate.

PENN 1 Ground Rent Reset Determination

On April 22, 2025, the Panel appointed to determine the ground rent payable for the PENN 1 land parcel for the 25-year period beginning June 17, 2023 determined that the annual rent payable will be $15,000,000.

Further, litigation is currently pending between the parties in New York County Supreme Court relating to the matter. To date, the court denied our motion to dismiss the action and we have filed a notice of appeal. The Panel’s decision provides that if the fee owner prevails in a final judgment in the litigation, the annual rent for the 25-year term will be $20,220,000, retroactive to June 17, 2023.

We were accruing $26,205,000 per annum of ground rent based on a previous estimate and therefore, in connection with the Panel’s determination, we reversed $17,240,000 of previously accrued rent expense during the three months ended March 31, 2025. Additionally, commencing in the first quarter of 2025, we are now paying based on the $15,000,000 annual rent.

770 Broadway

On May 5, 2025, we completed a master lease with New York University (“NYU”) to lease 1,076,000 square feet at 770 Broadway, on an “as is”, triple net basis for a 70-year lease term. Under the terms of the master lease, a rental agreement under Section 467 of the Internal Revenue Code, NYU made a prepaid lease payment of $935,000,000, and will also make annual lease payments of approximately $9,300,000 during the lease term. NYU has an option to purchase the leased premises in both 2055 and at the end of the lease term in 2095. NYU will assume the existing office leases and related tenant income at the property.

We used a portion of the prepaid lease payment to repay the $700,000,000 mortgage loan which previously encumbered the property.

In connection with the transaction, pursuant to GAAP, we will recognize an approximate $800,000,000 financial statement gain in the second quarter of 2025.

Vornado will retain the 92,000 square feet retail condominium leased to Wegmans.