Vornado Realty Trust has taken out a $450 million loan against a Times Square property that had been debt-free, a move that bolsters the amount of cash in the developer’s bank account by 40%.
“Companies are more focused on retaining cash given the turmoil in the market,” said Alexander Goldfarb, a real estate analyst at Piper Sandler. “Having more is better than less.”
Vornado, New York’s second-largest commercial landlord, has seen its stock price fall by about 20% in the last six months because investors fear a slowing economy will cool demand for office space. Economic activity “contracted modestly” in New York over the past month, the Federal Reserve said in a report yesterday, as “heightened uncertainty weighed on businesses and consumers.” Such uncertainty could complicate Vornado’s plans to lease up PENN 2, a 1.8 million-square-foot tower next to Penn Station that’s being redeveloped at a cost of $750 million.
Vornado entered 2025 with nearly $1 billion in cash on its books, but that sum was $300 million lower than the prior year because cash flow decreased due to sagging rental income and rising expenses. In 2023 the developer cut its dividend payout by two-thirds.
To bolster its coffers, the developer elected to borrow $450 million for five years at a 6.3% interest rate. Collateral was 100,000 square feet of retail space at 1535 Broadway that includes the 1,600-seat Marquis Theater, stores and a six-story billboard visible all over Times Square. The property previously had no debt attached to it, credit-rating agency KBRA said in a report Wednesday. Vornado will pocket $425 million in proceeds after closing costs and other items.
Vornado declined to comment.
Vornado isn’t the only Times Square landlord preparing for tougher times ahead. The owner of the Marriott Marquis Hotel, Host Hotels & Resorts, recently filed to raise up to $600 million by selling shares.
For now, tourism activity in New York City remains steady, according to the Federal Reserve. Ticket sales at Broadway theaters are “solid” and hotel rates and occupancy have risen slightly over last year. But an unidentified New York City hotel owner said international reservations are falling off, the Fed said.
