Vornado’s Latest D.C. Deal to Support More Focused Strategy

Vornado Realty Trust has entered into an agreement to acquire Washington, D.C.'s Executive Tower, an 11-story, 130,000-square-foot Class A trophy office building in which it already owns a 2.5 percent stake.

November 8, 2011
By Scott Baltic, Contributing Editor

Vornado Realty Trust announced Monday that it has entered into an agreement to acquire the Executive Tower, an 11-story, 130,000-square-foot Class A trophy office building in Washington, D.C. The building, also known as 1399 New York Ave. N.W., is in the East End submarket, only two blocks from the White House. The REIT already owns a 2.5 percent interest in the building and will be acquiring the majority 97.5 percent interest, for a purchase price of approximately $104 million.

A Vornado spokesperson and a prepared statement both emphasized that the purchase is subject to customary closing conditions, though if the deal is consummated, the company expects to close in the fourth quarter. Vornado declined to provide any additional information about the transaction.

The announcement comes on the heels of last week’s news that Vornado will be selling both the 350 West Mart Center in Chicago and four mixed-use assets in Manhattan in two transactions totaling about $290 million in net cash proceeds. “They’ve articulated to the investment community that they were going to simplify their business a bit and focus on their core office and retail, on owning properties in Manhattan and D.C.,” Sheila McGrath, senior vice president of equity REIT research with global investment bank Keefe, Bruyette & Woods, told Commercial Property Executive at the time.

The potential acquisition of 1399 New York Avenue appears consistent with the REIT’s apparent strategy. The building’s tenants include Abbott Laboratories, Deutsche Bank Alex Brown, Genentech Inc., Hoffmann-La Roche and Ashcroft Group LLC, according to Google Maps. Vornado’s Washington, D.C., office, Vornado/Charles E. Smith, is that metro area’s largest owner/manager of commercial properties, owning 74 office properties totaling 18.0 million square feet and managing an additional 23 office and other commercial buildings totaling 5.4 million square feet.

Vornado is one of the nation’s largest owners and managers of commercial real estate, with a portfolio of over 100 million square feet, primarily in the New York and Washington, D.C., metro areas.