VornadoVornado Realty Trust is looking to refinance debt on two office towers - one in New York and one in San Francisco - it owns with DonaldDonald Trump, a move that could support hundreds of millions of dollars for the former President's business.
Vornado, formerly run by Steven Roth, has tapped JPMorgan Chase Co. to lead a $1.2 billion loan for a complex centered around 555 California St. San Francisco, one of the highest buildings in USA.Proceeds, under the chairman’s title, will return to the buildings and fund an additional $617 million to the owners, according to a marketing document obtained by Bloomberg.
Roth said a similar deal on the 1290 Avenue of the Americas in Manhattan is being worked out this month, though it could not be determined if that loan will also pay dividends.
While Trump is the majority owner of the properties, Vornado's 30% stake in towers is the most valuable part of his portfolio, after sharing about one-third of his $2.3 billion fortune, according to the Bloomberg Billionaires Index.The refinancing -- and potential cash windfall - come months after several banks tied to the former president said they would no longer work with him in the fallout of the deadly Capitol riots.
Donald has at least $590 million in debt owing in the next four years to other properties owned by the Trump OrganizationTrump Organization, more than half of which are personally guaranteed.Some of these properties have suffered since the pandemic, including Miami International Airport and its golf resort in Washington, D.C.
'We are one of the most under-leveraged real estate brokerages in the country relative to our assets, said Eric Trump, executive vice president of the Trump OrganizationTrump Organization.
Trump and Vornado are benefiting from an opportune time to refinance property debt as the Federal Reserve keeps the rates at record lows and the government pumps money into the economy.With few sources of substantial income from international markets, investors have turned to the relatively higher yields of investments like commercial mortgage bonds.Demand has extended even to office towers, even with the lingering uncertainty over when workers will return.
Despite Covid 19 closing offices and turning San FranciscoSan Francisco's financial district into a ghost town for more than a year, according to the marketing materials Vornado and Trump’’ was as of February more than 90% leased properties.The main tenants of the property are Morgan Stanley and Bank of America Corp.
We had attempted to sell the two assets it owns with Trump last year, but cancelled the effort after not reaching their pricing targets.
"We found investors to be uncertain, distracted and handicapped by inability to travel," Roth, Vornado’s chief executive earlier this month said in a letter to shareholders.If the markets improve, we may soon look at other alternative building materials," he added.
Roth said in the letter that Vornado is in the process of refinancing 1390 Avenue of the Americas and that the same process for 555 California is On Deck.
Eric Trump described the properties as 'allegedly two of the best commercial assets there are in the country today'.
Still, the connection to Trump could not be helpful when Vornado is gone.In February, Roth stressed Trump's limited role in the ownership of the two properties.
Roth said : 'His role in buildings is completely passive, on an earnings call.'He's delighted and I'm OK with that.
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