NEW YORK— Vornado Realty Trust has completed a master lease with New York University to lease 1,076,000 square feet at 770 Broadway, on an “as is”, triple net basis for a 70-year lease term. The building features Manhattan’s only Wegmans supermarket.
Under the terms of the master lease, a rental agreement under Section 467 of the Internal Revenue Code, NYU made a prepaid lease payment to Vornado of $935 million and will also make annual lease payments to Vornado of approximately $9.3 million during the lease term. NYU has an option to purchase the leased premises in both 2055 and at the end of the lease term in 2095. NYU will assume the existing office leases and related tenant income at the property.
This space will provide NYU room for growth as well as enable the University to consolidate faculty and research in a collaboration hub focused on battling diseases and saving lives and to foster innovation that will keep the US at the forefront of strategic areas of technology such as AI, biotechnology, and quantum information sciences. NYU is in the preliminary stages of planning and design at this time. The building will be an important hub for NYU’s initiative to advance engineering, science, and technology, an effort already supported by $200 Million in donations across the University.
There are existing office tenants in 770 Broadway, currently occupying approximately half of the building. NYU will assume these existing leases and related rental income. The first stage of NYU’s programming will focus on converting the vacant floors to science and technology uses, including laboratories, classrooms and workstations.
Phase Two of NYU’s plans include replacing the University’s rented space elsewhere in New York, relocating affiliates to 770 Broadway as existing leases expire. This transition is estimated to reduce rent expense by more than $800 million over the first 30 years.
Vornado used a portion of the prepaid lease payment to repay the $700 million mortgage loan which previously encumbered the property.
Vornado will retain the 92,000 square feet retail condominium leased to Wegmans on the ground floor.
