NEW YORK — Vornado Realty Trust announced that its 50% joint venture with the Related Companies has completed a 99-year lease with Empire State Development (“ESD”) for the commercial space at the historic Farley Post Office building across from Penn Station.
The property is located on the double block bounded by 8th and 9th Avenues and 31st and 33rd Streets, across the street from Penn Station and Madison Square Garden.
The joint venture will develop 850,000 square feet of commercial space, comprised of approximately 730,000 square feet of office space targeting creative class tenants (with 32 by 40 foot column spacing and over 17 foot ceiling heights) and approximately 120,000 square feet of retail space. This transaction adds to Vornado’s 9 million square foot Penn Plaza holdings.
The joint venture has made a $230 million upfront contribution to the construction of the Moynihan Train Hall. Simultaneously, the joint venture completed a $271 million loan facility, with an initial advance of $202 million. The interest only loan is at LIBOR plus 3.25%, currently 4.41%, and matures in June 2019, with two one-year extension options.
The joint venture has also entered into a development agreement with ESD and a design-build contract with Skanska Moynihan Train Hall Builders. Under the development agreement with ESD, the joint venture is obligated to build the Moynihan Train Hall with Vornado and Related each guaranteeing the joint venture’s obligations. Under the design-build agreement, Skanska Moynihan Train Hall Builders will fulfill all of the joint venture’s obligations. The obligations of Skanska Moynihan Train Hall Builders has been bonded by Skanska USA and bears a full guaranty from Skanska AB.
On Monday, NY Governor Andrew Cuomo and NY Senator Charles Schumer marked the opening of Penn Station’s expanded West End Concourse, the first phase of the transformational redesign of America’s busiest transit hub into a world-class facility for the 21st Century. The new, state-of-the-art concourse will provide direct access to 17 of the station’s 21 tracks, and will connect the future Moynihan Train Hall to Penn Station underground via 33rd Street, with direct connection to the 8th Avenue Subway (A/C/E). New plazas and street level entrances at 8th Avenue into the century-old, landmarked Farley Building on either side of monumental staircase will provide access to this new, lower concourse as well as streamline boarding and exiting for passengers. Public art and landscaping will greet commuters accessing the trains via these new entrances.