Vornado Picks Up Interest in $475M Times Square Property

Greenwich, CT-based Starwood Property Trust and Starwood Capital Group announced the sale of a 25% stake in both the first mortgage and mezzanine loan on 701 Seventh Avenue in the Times Square area of Manhattan to Vornado Realty Trust. On October 16, 2012, Starwood Property Trust and Starwood Capital Group announced the co-origination of a $475 million first mortgage and mezzanine financing for the acquisition and redevelopment of a 10-story retail building located in Times Square to build Times Square Gateway Center, a 340,000-square-foot multi-use complex. $375 million was funded at closing and $100 million will be funded upon reaching certain milestones during the transformation of the property.

STWD, Starwood Distressed Opportunity Fund IX, and VNO have now funded $210.9 million, $70.3 million and $93.8 million, respectively, and each party will fund their pro rata share of any future fundings according to a GlobeSt.com report. The lenders intend to sell the first mortgage in the near term to increase their investment returns and retain the mezzanine loan. Following the completion of the sale, the existing lenders expect that the mezzanine loan will generate an IRR in excess of 14% before attributing value to the equity participation received in the transaction which could be material.

"The Times Square Gateway Center will greatly enhance the North end of Times Square," said Ike S. Franco, Co-Managing Partner of Infinity Urban Century, LLC, of the new development. "With the combined strength of Maefield Development, New Valley, and The Witkoff Group, this project has the potential to become one of the most innovative New York City developments in decades and to further cement the image of Times Square as the most vibrant global retail and entertainment district."

For more news and information visit Blumberg Capital Partners.

Crystal City's Tallest Building Gets Approval

The Arlington County Board voted Saturday to approve 1900 Crystal Drive, Vornado's enormous office building that will be the tallest in Crystal City, according to a Washington Business Journal article. The new building, designed by New Haven-based Pickard Chilton, is the first in Crystal City to be considered under the Crystal City Sector Plan, which was adopted in 2010.

The new building will sit on a parcel currently occupied by an empty 12 story Federal office building at 1851 S. Bell Street that will be torn down to make way for 1900 Crystal Drive. 1900 Crystal Drive will include 24 stories with 720,000 square feet of office space, a 5 story underground garage, and 32 bicycle parking spaces. The design employs a "ski jump architectural treatment" as part of its glass facade, and will be a major contributor to the upgrading of Crystal City's outdated architecture and infrastructure.

As part of the agreement with the county, the developer, Vornado, would provide curb, gutter and streetscape improvements around the perimeter of the property, according to an ARLnow.com article. The plan also involves the construction of an approximately 16,000 square foot interim park near the intersection of Crystal Drive and 18th Street South.

For more news and information visit Blumberg Capital Partners.