Vornado to Develop Retail Space at NYC Times Square Hotel
Vornado Realty Trust (VNO) agreed to lease and redevelop the retail portion of the Marriott Marquis Times Square hotel in the heart of one of Manhattan’s most popular tourist areas, and will have an option to buy the space.
The real estate investment trust will spend as much as $140 million on improvements, including converting the underground parking garage into stores and adding six stories of LED signs, landlord Host Hotels and Resorts Inc. said today in a statement. The 20-year lease enables New York-based Vornado to purchase the space from Bethesda, Maryland-based Host, at a price based on future cash flow.
Vornado, which reported a 31 percent decline in funds from operations in the first quarter, is seeking ways to boost its stock price and respond to shareholder complaints that its structure is too complex, Chairman Steven Roth said in a letter to investors in April. The REIT expects to sell about $1 billion of assets by the end of 2012, Chief Executive Officer Michael Fascitelli said at a conference in June.
“Investing new dollars in things like Times Square retail is very consistent with Vornado’s core strategy,” Alex Goldfarb, an analyst at Sandler O’Neill & Partners LP in New York, said in a telephone interview. “It’s the need to continue this process that will take time, but the market wants to see that Vornado is making progress.”
Vornado agreed last month to buy retail space at Manhattan’s 666 Fifth Ave., located in the world’s priciest shopping corridor, for about $707 million. The company said the purchase would be funded with debt along with proceeds from sales of $428 million of properties across the U.S. and Canada, including the Washington Design Center, the Boston Design Center and the L.A. Mart.
The Times Square property is across from 1540 Broadway, where Vornado owns retail space leased to Forever 21 and the Disney Store.
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