Vornado shelves effort to sell offices co-owned with Trump

[NEW YORK] Vornado Realty Trust tabled an effort to sell stakes in office towers in New York and San Francisco that it co-owns with the Trump Organization, according to a person with knowledge of the matter.

For months, the New York landlord had been marketing its 70 per cent interest in the properties, at 555 California St in San Francisco and 1290 Avenue of the Americas in Manhattan. On an earnings call this month, Vornado said it was tempering its price expectations for a sale, citing investor caution in commercial-property markets amid the coronavirus pandemic.

"We achieved very good equity and debt pricing for both assets at arguably the trough of the market," Doug Harmon, a Cushman & Wakefield chairman who was handling the New York sale for Vornado, said in an emailed statement.

"Now with the election uncertainty behind us and with much more clarity and positive news surrounding the vaccine's efficacy and speed to market, we are now focusing more on refinancing both assets and are leaning toward re-offering and/or recapitalising the package in 2021, when the durability of the cash flows is even more valued, when international investors can travel with less restrictions, and the path back to normal is underway," he added.

Representatives for Vornado and the Trump Organization didn't immediately reply to requests for comment. A representative for Eastdil Secured, the firm handling the sale of the San Francisco property, declined to comment.

Vornado's scuttling of a plan to reap US$5 billion in a sale of the two properties was reported earlier Friday by the Wall Street Journal.

Commercial-property deals slowed to a trickle in the US after the coronavirus hit in March. Many office employees are still working remotely, leaving investors concerned about the longer-term outlook for office demand and the sorts of rents that buildings will command.

Even skyscrapers like 555 California - which counts Goldman Sachs Group and Microsoft among its occupants - haven't been spared. Vornado said this month that a tenant at the building chose to exercise a five-year renewal option, but the rent will be determined next year "based on fair market value". That may indicate there's still disagreement over where rates are headed.

Vornado, led by Steven Roth, and other New York-focused landlords have been trying to shore up their balance sheets after being hit hard by the pandemic. Vornado's shares have fallen about 40 per cent this year.

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