Vornado Reportedly Looking For Way Out Of Joint Venture With Trump Organization
Vornado is reportedly working to end its relationship with The Trump Organization, and is looking at buying out the former president’s company at two of his most profitable properties.
Vornado and The Trump Organization co-own office buildings at 1290 Sixth Ave. in Manhattan and at 555 California St. in San Francisco. Vornado, led by one of Trump’s longtime friends, Steven Roth, is examining how it could buy out Trump’s 30% stake in both properties, The Wall Street Journal reports. Vornado was exploring selling the properties for a combined price of $5B last year but wasn't successful.
Plans to refinance also didn’t pan out, and the company became concerned that the Trump connection was putting off lenders and buyers. Vornado has also looked into ways it could stop paying The Trump Organization income from the property, which could spark a legal battle and put a quicker end to the partnership, according to the Journal.
The buildings are an important part of the Trump portfolio, which has suffered financially as a result of the pandemic. Both properties provide about $20M in annual cash flow to the company. Plus, the buildings’ performances have improved over the years, in comparison to other Trump properties. In New York City, for example, Trump Tower’s net operating income dropped 6% between 2016 and 2019, while 1290 Sixth Ave.’s NOI went up 27%, per the Journal's analysis.
Cushman & Wakefield, which has cut ties with Trump and will no longer handle its leasing at signature properties, is a tenant at the building, but it has said it doesn't have plans to move.
Trump told the Journal that “Vornado has been an excellent partner so far and we expect that to continue." A spokesperson for Vornado declined to comment.
Vornado would be the latest in a long line of companies seeking to distance themselves from Trump after a mob of his supporters stormed the U.S. Capitol in a deadly riot last month.
New York City is exiting all business commitments with the organization and JLL has said it would no longer market The Trump Hotel in Washington, D.C., for sale. Signature Bank will also stop doing business with Trump and Deutsche Bank, Trump’s primary lender, said it wouldn't do any further deals with the company.
That is set against a backdrop of an economically challenging time for the company. The Trump Organization experienced a 38% overall drop in revenue between 2019 and 2020, The New York Times reported last month. Overall, the company's revenue for 2020 and the first few days of January was $278M.
Meanwhile, Trump is facing an impeachment trial in the Senate this week over accusations he incited the insurrection on Jan. 6. Prosecutors in Manhattan are starting to ramp up witness interviews and have engaged forensic accountants as part of their investigations into whether Trump committed insurance and tax fraud with his real estate business, Reuters reports.