Vornado Realty Trust (VNO) has penned a deal to acquire an office building in the Long Island City, NY for around $142 million, including the assumption of an existing $62 million mortgage. The move reflects the company’s efforts to boost up its portfolio with quality office assets.
Named as Center Building, this 8-story property encompasses 437,000 square foot of space. This office asset, positioned at 33-00 Northern Boulevard in Long Island City, is 98% leased, denoting solid demand among customers for space in this building.
The acquisition is projected to be accomplished in the first quarter of 2015, provided certain customary closing conditions are met. Notably, the 4.43% mortgage worth $62 million is scheduled to mature in Oct 2018.
According to a report from commercial real estate advisory firm, Newmark Grubb Knight Frank (NGKF), Long Island City office market continues to experience growth in demand for space from the creative and tech firms. As a result, this demand, amid a limited supply, has pushed the asking rents ups while overall availability continued to fall.
As a matter of fact, Vornado has lately been focusing on improving its core business and making strategic acquisitions and leasing activities. Most recently, Vornado disclosed a 17-year lease agreement with Amazon.com Inc. (AMZN) for 470,000 square feet of space in an office building in Manhattan, NY. The building is basically located at 7 West 34th Street in the Penn Plaza District, in which Vornado owns 9 million square feet of commercial space.
In recent times, the company closed the buyout of the St. Regis Hotel retail condominium and the nearby retail townhouse for about $700 million. We believe these strategic acquisitions and leasing activities will go a long way in enhancing Vornado’s profitability.
Vornado currently carries a Zacks Rank #3 (Hold). Investors interested in REITs may consider better-ranked stocks like Cousins Properties Inc. (CUZ) and Prologis, Inc. (PLD). Both stocks sport a Zacks Rank #2 (Buy).
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