NEW YORK | 350 Park Avenue | 1,450 FT | 70 FLOORS

How come?

No, like that’s just what it comes out to be with it’s “new” zoning’s calculations, it’s the same amount as the existing building lol.

2 Likes

https://www.kron4.com/business/press-releases/globenewswire/8736487/vornado-and-rudin-complete-350-park-avenue-and-40-east-52nd-street-transactions/

3 Likes

(https://elevatorworld.com)

4 Likes

350 Park Avenue:

On January 24, 2023, we and the Rudin family (“Rudin”) completed agreements with Citadel Enterprise Americas LLC (“Citadel”) and with an affiliate of Kenneth C. Griffin, Citadel’s Founder and CEO (“KG”), for a series of transactions relating to 350 Park Avenue and 40 East 52nd Street.

Citadel will master lease 350 Park Avenue, a 585,000 square foot Manhattan office building, on an “as is” basis for ten years, with an initial annual net rent of $36,000,000. Per the terms of the lease, no tenant allowance or free rent is being provided. Citadel will also master lease Rudin’s adjacent property at 40 East 52nd Street (390,000 square feet).

In addition, we have entered into a joint venture with Rudin (“Vornado/Rudin”) to purchase 39 East 51st Street for $40,000,000 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 ($900,000,000 to Vornado and $300,000,000 to Rudin) and build a new 1,700,000 square foot 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 $250,000,000 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 $315,000,000 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 ($900,000,000 to Vornado and $300,000,000 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 $200,000,000 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.

5 Likes

Jing Xian Tan Bonnel

I know the opportunity with Citadel is still a bit down the road, but are you able to speak to the financing strategy there in context with your existing development pipeline around Penn District? Just generally, like how are you thinking about the capital allocation and sourcing for these future projects.

Michael J. Franco

Camille, I think the good news is we don’t have to do it today because it would be very, very difficult to line up construction financing and very expensive. So with respect to 350, that project is not right yet, right? It’s – it’ll be right in 2, 3 years, but it’s not right today. And so hopefully, the markets are more hospitable than we expect they will be. And I think the same goes with respect to PENN. Again, we’re not – as I think Steve commented on the last call, the market really is not conducive for new development today. Construction financing is very expensive, if available, which generally is not as banks have pulled back.

Steven Roth

So, we’re pretty excited about 350 Park Avenue, and maybe even more importantly, tenants even more excited about it. Our strategy there is actually very simple. The land value, our land value will constitute our equity contribution. So our land value will represent the equity. We will not have to put in maybe another – a very tiny $10 million, $20 million, $30 million of cash to represent our share in the equity. The balance of it should be easily in a normalized market (inaudible) under – in the construction financing or permanent financing.

3 Likes

Franco and Roth’s comments actually make it seem like this tower is less of a sure thing than Commodore/175 PA.

It seems mostly a matter of what Ken Griffin wants to do. They are the Chase behemoth in the 350 situation and have the money to make this tower happen with cash on hand, but the developers aren’t in nearly as secure a position. Hopefully, Ken and Co. have a good 2023 and feel confident enough to make this happen.

Rechler and RXR (and TF Cornerstone) seem to be in a stronger position with their site compared to Vornado and Rudin. They aren’t as dependent on one specific potential tenant, although they will need a huge lease from someone to get the ball rolling.

Which they will undoubtedly get. 350 isn’t in a bad location but 175 is in a much better one. Being right on top of grand central is basically a money printing machine. (Especially when it’s a new state of the art tower).

Really the only place I could see being better is around Penn when that area gets cleaned up (and other things happen like the PABT redevelopment)

1 Like

That’s not remotely true. They have a tenant. The space that Citadel doesn’t take will yield astronomical rents.

The cost of borrowing right now is probably higher due to inflation that it had been until a few years ago.

Ken and co. wouldn’t have signed that big deal if they didn’t intend to make this project happen.

Vornado and Rudin def have Citadel. I’m more arguing that’s a double-edged sword.

Now Vornado and Rudin have made their bed with Citadel who now calls the shots at 350. In a way its more Citadel’s building now than theirs.

I’m saying RXR and TF Cornerstone have A LOT more flexibility AND demand for their space. 350 might be a high prestige address, but 175 PA is way more convenient and nobody necessarily has to play second fiddle to the elephant in the room.

If Rechler tears down the Hyatt without an anchor tenant, he’s still golden because firms will see its happening and a bunch will sign MOUs or letters of intent and financing could happen even without a single massive lease. The hotel portion will be the loftiest in the city; it will sell itself and probably be 5 star, maybe the most expensive hotel in the city.

There’s no way that could happen at 350.

1 Like

I think the project is being slightly misunderstood, because while Citadel has made an agreement with Vornado and Rudin already, they still have options to decide on what to do moving forward.

If they decide to build the tower with Vornado and Rudin, the building would be majority owned by Citadel with a 60% stake in it. And the 2nd option where they just buy the site, it would also still be theirs, obviously. The project is effectively Citadel’s in either case and that is established, but that doesnt mean 350 Park Ave as a development itself has more or less of a chance than 175 Park Ave, the two shouldn’t be being compared against eachother because they are under different circumstances.

Who owns the development/who is anchoring a building doesnt really affect who leases the other parts because then that would cause issue with other such developments that already exist and there is no such precedent to show that that in particular is a problem.

We already know that 175 Park Ave has a somewhat anchor tenant in the Grand Hyatt, albeit small. And while the new Grand Hyatt will be the highest hotel in the city and may garner a 4-5 star reputation, those aspects will not make it the most expensive in the city, there are still other higher rated brands in the realm of hotel portfolios like the Park Hyatt, Ritz Carlton, WA, Mandarin Oriental, St. Regis, Four Seasons, etc. A Park Hyatt will always be more expensive then a Grand Hyatt no matter the location because Park Hyatt is apart of Hyatt’s luxury class, Grand Hyatt is not.

3 Likes

The arrangement is very clear. There’s nothing ambiguous about it. Absent something utterly unexpected (e.g., America going to war with Russia or China, and the economy totally collapsing), this tower will rise.

1 Like

I can’t tell if your comment was directed at me or was just a general comment. My particular comment was directed at SideStreet, I understand what is going on with this tower, but I was slightly confused to if SideStreet understood that the tower is owned by Citadel either way.

1 Like

It’s a general comment. This tower is virtually certain to rise, and it’s going to be really successful.

1 Like

Maybe I was making something out of nothing. It seems to me that 175 is virtually certain to rise, but that this one might be less so as much depends on Citadel’s performance the next 2 years.

I do understand Citadel essentially owns and controls the site, but I found the Vornado exec’s comments from that article puzzling: They suggested that they saw financing and interest rates as the obstacles to getting this one off the ground when in reality the deciding factor is when Citadel decides to pull the trigger. Citadel doesn’t care about interest rates beyond how they affect the fund’s investments; if they wanted to they could fund the tower tomorrow.

The disconnect gave me the impression that Vornado saw a small possibility that Citadel would pull a News Corp (w/ 2 WTC) and eventually decide against investing in a new HQ here. This will be my last comment on this suspicion since I feel like its become a distraction.

1 Like

Citadel has enormous amounts of money. It’s in a totally different situation from Newscorp.





So back on topic, what does that lease agreement mean for the new 350 Park?

1 Like

Guys and gals, lets get back on topic. Keep politics out of this thread please…
Bunch of posts had to be deleted.

10 Likes

Not only in this topic but from all topics here in Yimby forum.

6 Likes