Vornado Realty Trust announced that it has agreed to sell its 49.5% interest in the 666 Fifth Avenue office condominium to Kushner Cos., the majority owner. The contract was negotiated for net proceeds of $120 million, but as it is conditional, there can be no assurance that it will go through. If it does, the deal is expected to close in the third quarter of 2018. Vornado will keep its retail space in the Midtown Manhattan office building, with the Uniqlo, Tissot and Hollister stores amounting to 125 linear feet of frontage on Fifth Avenue at 53rd Street.
The property at 666 Fifth Avenue has a controversial history. In 2007, it was bought by Kushner Cos. for a whopping $1.8 billion, making it the most expensive building ever purchased in the U.S. Now, it struggles with a $1.2 billion mortgage due in February 2019 and a vacancy rate of 30%. According to Curbed NY, tensions were growing between Kushner and Vornado regarding the future of the building. Kushner wanted to turn it into a 1,400-foot luxury condo, hotel and retail skyscraper designed by Zaha Hadid, while Vornado preferred to keep it as an office tower.
Charles Kushner, who took over as company CEO after his son Jared left for Washington, doesn’t seem too worried about the future of 666 Fifth. Indeed, he admitted to scrapping the ambitious initial plan, but he doesn’t want to give up repositioning altogether. In a recent interview with The Real Deal, he said: “The plan entails making this 1957 [office] building into a 2018 [office] building with floor-to-ceiling windows, convector units, reskinning the building, upgrading elevator, lobby, and really making this building of the quality equivalent to the triple-A location where it sits.” In the same interview, he claimed that despite decisions to no longer pursue sovereign funds, his firm will close $2 billion in financing for the building in the first half of 2018.