[NYguy]

https://commercialobserver.com/2022/...in-agreements/

Vornado’s plans for a Midtown supertall to rival 425 Park are being put into action


BY EMILY FU
DECEMBER 9, 2022

Citadel and an affiliate of its founder and CEO Kenneth Griffin reached an agreement with Vornado Realty Trust and Rudin Management Company that will give it the ability to build a new office tower in Midtown East, Vornado announced Friday.

As part of the deal, Citadel will master-lease Vornado’s 585,000-square-foot 350 Park Avenue for 10 years on an “as is” basis, with an initial annual net rent of $36 million. The hedge fund behemoth will also master-lease Rudin’s adjacent 390,000-square-foot 40 East 52nd Street.

Vornado has also formed a joint venture with Rudin to purchase 39 East 51st Street for $40 million. The companies will combine that property with the above two assets to create a “premier development site,” according to the release.

Starting in 2024, Griffin will have options to invest in the future of the development site, and either acquire a 60 percent interest in the Vornado/Rudin JV — valued at $1.2 billion — to build a 1.7 million-square foot office tower; execute a 15-year anchor lease for Citadel to take 850,000 square feet at the new tower, terminating its master leases at 350 Park Avenue and 40 East 52nd Street when the properties’ are demolished; or exercise an option to purchase the development site for $1.4 billion, with Vornado reaping $1.085 billion in that scenario and Citadel being the sole developer.

Everyone likes options, and there’s one more. Between October 2024 and September 2030, the Vornado/Rudin JV will be able to sell the site to Griffin for $1.2 billion — with Vornado raking in $900 million — and the JV will have the right to invest in Griffin’s development of the site. Phew.

Vornado originally planned to build a new 1,500-foot tower at 350 Park. In November the commercial mortgage-backed securities loan on the property went into special servicing, with a Vornado spokesperson stating the transfer was due to a “complex consent request.” Chances are, this was it.

Citadel is already a tenant at 350 Park and a new development there could serve as its new New York City headquarters. The firm seemingly has an unending appetite for office space, having expanded to 331,800-square-feet at 425 Park Avenue in 2019, which a spokesperson for Citadel told Bloomberg it has already outgrown.

“We reached the decision to pursue this transaction after thorough consideration of other alternatives in New York City,” Zia Ahmed, a spokesperson for Citadel, told Bloomberg. “We expect that if this building is built it will be able to house all of our New York City employees for both Citadel and Citadel Securities, which will reduce the need for us to have them spread across multiple sites in New York City as they currently are.”

https://www.bloomberg.com/news/artic...uverify%20wall

Griffin Strikes Deal for Potential New Citadel NYC Skyscraper
Agreement gives Griffin options for how to proceed on a building that can house all of his Citadel and Citadel Securities employees in the New York area.


ByNatalie Wong and Amanda L Gordon
December 9, 2022

Citadel’s Ken Griffin is gearing up to develop a giant new office building in the heart of Manhattan that will serve as the headquarters for his businesses in New York.

Griffin plans to acquire and build a 1.7 million-square-foot office skyscraper that would replace three adjacent properties in Midtown, at 350 Park Avenue, 40 East 52nd Street and 39 East 51st Street, according to a statement Friday. Griffin has two options to pursue this, starting in October 2024 and lasting through June 2030: either by taking a 60% interest in a joint venture with landlords Vornado Realty Trust and Rudin Management Co., which values the site at $1.2 billion, or buying the site outright

https://www.globenewswire.com/news-r...nd-Street.html

Vornado and Rudin Announce Agreements with Respect to 350 Park Avenue and 40 East 52nd Street


December 09, 2022

Vornado Realty Trust and Rudin today announced that they have reached agreements with Citadel Enterprise Americas LLC (“Citadel”) and with an affiliate of Kenneth C. Griffin, Citadel’s Founder and CEO (“KG”), on a series of transactions relating to 350 Park Avenue and 40 East 52nd Street. Effectiveness of the agreements is subject to the receipt of certain third-party approvals which the parties expect to receive within the next 35 days.

Citadel will master lease Vornado’s 350 Park Avenue office building (585,000 square feet) on an “as is” basis for ten years, with an initial annual net rent of $36 million, retroactive to June 15, 2022. Citadel will also master lease Rudin’s adjacent property at 40 East 52nd Street (390,000 square feet).

In addition, Vornado has entered into a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40 million and, upon formation of the KG joint venture described below, will combine that property with 350 Park Avenue and 40 East 52nd Street to create a premier development site (collectively, the “Site”).

From October 2024 to June 2030, KG will have the option to either:

* acquire a 60% interest in a joint venture with Vornado/Rudin that would value the Site at $1.2 billion ($900 million to Vornado and $300 million to Rudin) and build a new 1.7 million square foot trophy office tower (the “Project”) pursuant to East Midtown Subdistrict zoning with Vornado/Rudin as developer. KG would own 60% of the joint venture and Vornado/Rudin would own 40% (with Vornado owning 36% and Rudin owning 4% of the joint venture along with a $250 million preferred equity interest in the Vornado/Rudin joint venture).

-at the joint venture formation, Citadel or its affiliates will execute a pre-negotiated 15-year anchor lease with renewal options for approximately 850,000 square feet (with expansion and contraction rights) at the Project for its primary office in New York City;

-the rent for Citadel’s space will be determined by a formula based on a percentage return (that adjusts based on the actual cost of capital) on the total Project cost;

-the master leases will terminate at the scheduled commencement of demolition;

-or, exercise an option to purchase the Site for $1.4 billion ($1.085 billion to Vornado and $315 million to Rudin), in which case Vornado/Rudin would not participate in the new development.

The parties intend to immediately commence design of the Project and process approvals.

Further, Vornado/Rudin will have the option from October 2024 to September 2030 to put the Site to KG for $1.2 billion ($900 million to Vornado and $300 million to Rudin). For ten years following any put option closing, unless the put option is exercised in response to KG’s request to form the joint venture or KG makes a $200 million termination payment, Vornado/Rudin will have the right to invest in a joint venture with KG on the terms described above if KG proceeds with development of the Site.