PARSIPPANY—Vornado’s 25 percent owned real estate fund (Vornado’s Fund) and the owner of the property have recapitalized the Crowne Plaza Hotel in Times Square.
This property, located at 48th Street and Broadway in Times Square, is comprised of a 795-key hotel, 15,000 sq. ft. of retail space, 180,000 sq. ft. of office space, nine large signage offerings, a 159-space parking garage and a health club. The new venture plans to reconfigure and reposition the retail and office space as well as add additional signage. Vornado will manage and lease the commercial components of the property and the Fund’s partner will asset manage the hotel.
In May 2011, Vornado’s Fund initiated this transaction by agreeing to acquire the $34 million most junior tranche of the property’s mezzanine debt. In December 2011, Vornado’s Fund ($31 million) and its partner ($22 million) contributed new capital to pay down third party debt and for future capital expenditures. The new capital was contributed in the form of debt convertible into preferred equity that receives a priority return and then will receive a profit participation. Vornado’s Fund has an economic interest of approximately 38 percent in the property. Vornado’s Fund’s investment is subordinate to the property’s $259 million of senior debt, which matures in December 2013 with a one-year extension option.
Vornado Realty Trust is a fully integrated equity real estate investment trust.