Vornado Considering Sale of Long-Stalled Downtown Crossing Development
Retail Traffic reports: By now, nearly everyone in the commercial real estate sector is aware of the gaping empty hole on Franklin Street in Boston’s Downtown Crossing district. New York-based REIT Vornado Realty Trust purchased the site, then home to Filene’s Basement department store, in 2006 for $100 million at the peak of the market. The firm lined up its partners and financing to redevelop the site into a mixed-use behemoth composed of retail, multifamily, and hospitality properties. Vornado suspended the project in 2008 as the financial crisis set in, and has yet to restart construction despite the improvements posted throughout 2010 in the commercial property sector.
Yet Vornado held on to the development site for the past five years, with the knowledge that being extremely well-located, any future improvements built on the land would surely become a trophy asset. However, it was recently reported that Vornado has enlisted brokerage firm Cushman & Wakefield to sell the development site and shed the related outstanding debt on its balance sheet.
Of the sudden and unexpected move on Vornado’s part, Real Capital Analytics’ Managing Director Dan Fasulo told Retail Traffic that, “…given the economics of the deal, selling the property doesn’t quite make sense. Vornado would have trouble recouping its losses on the land today, but if it builds the project at a later date it will likely reap hefty returns...I think they’ll wind up sitting with this, or maybe they can find a cheaper source of capital to partner up with — maybe an institutional or foreign investor. Basically, what Vornado is saying is they don’t want to build now. They are going to wait until a new development on that site is a home run.”
For additional information on the development site at One Franklin Street in Boston as well as Vornado’s recent activity, please see the full article on Retail Traffic’s site.
View the full article on Retail Traffic: Vornado Considering Sale of Long-Stalled Downtown Crossing Development
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Posted by: Nina Turner