MetLife Loans $300M On West 34th Office Property

New York-based Vornado Realty Trust announced that it completed a $300 million recourse financing of 7 West 34th Street with a loan provided by Metropolitan Life Insurance Co. Vornado also announced that it has sold a 47% interest in the property to Korea Post, a sovereign wealth fund under the national postal service of South Korea, at a value of $561 million or $1,176 per square foot. Vornado originally purchased the 12-story office building in October 2000 for approximately $128 million from HRPT Properties Trust, which purchased it from Devon Properties in October 1997 for $110 million.

Built in 1910 and once home to Ohrbach's Department Store, the 477,000 square foot Manhattan office building in the Penn Plaza District sits across the street from the Empire State Building and is fully leased to Amazon in a 17-year contract signed in November 2014, with three five-year lease options that could stretch the lease until 2047. Vornado made significant capital improvements to the property in recent years, enlisted the architecture firm MdeAS — best known for its redesign of the GM Building's public plaza — to transform the lobby, and included upgraded elevators, new restrooms and a large outdoor terrace. Vornado will continue to own a 53% interest and continue to manage and lease the property.

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Amazon Takes Full Manhattan Building on 34th

Vornado Realty Trust has completed a 17 year lease for all 12 floors at 34th Street, confirming that Amazon is increasing its footprint in Manhattan, and further fueling speculation that the company will open its first retail store. The office building is in the Penn Plaza District where Vornado owns approximately 9 million square feet of commercial space.

"We have leased this building primarily as corporate office space and we intend to sublease to other tenants the ground floor retail space," Amazon spokeswoman Kelly Cheeseman said in a statement. Reports last month indicated Amazon was planning to open an experimental retail store in New York, which would showcase a few of the retailer's flagship products, according to a Business Journal article. Amazon could also use the space as offices for its growing publishing arm. That would be incredibly controversial in the publishing capital of the world, where many publishers set up shop. Amazon had a recent battle with Hachette Publishing Group over ebook pricing.

"While details were not published regarding the lease-term and the strategy (same-day pick-up vs. retail-orientation, for example), should Amazon view the branding and same-day convenience benefits of retail stores as significant enough to roll out more in the future, the omni-channel retail spectrum would essentially be complete," said Paul Morgan, research analyst at MLV & Co. This would "assuage investors concerns about long-run shopping center demand and reemphasize the centrality and stability of bricks-and-mortar retail and retail REIT portfolios."

For more news and information visit Blumberg Capital Partners.