Vornado Realty Trust has landed a $450 million loan to refinance a high-profile Times Square property in New York that counts among tenants a theater and retail stores, according to reports from bond-rating firms.
The five-year commercial mortgage-backed securities loan, with a fixed interest rate of 6.5%, is for Vornado’s 1535 Broadway, Moody’s said in a presale analysis of an offering for investors. Vornado co-owns the property with Crown Acquisitions.
The retail portion of 1535 Broadway that's collateral in the CMBS deal is separate from the 1,971-room Marriott Marquis hotel on the upper floors.
$300 million of the loan would go into the so-called SASB, or single-asset single-borrower, transaction, with the remainder to be securitized in a future offering, according to Morningstar DBRS in a separate report.
The majority of the loan proceeds will go toward prepaying some $629 million in preferred equity, Morningstar DBRS said, adding that the property has an appraised value of $1.04 billion.
The 107,000-square-foot property counts the Marquis Theatre as the largest tenant, with about 61,500 square feet of the footprint, followed by retailers Levi's, Sephora and Swatch, according to CoStar data.
The property also has large digital signage as part of its facade that measures six stories high and 330 feet wide, spanning the entire block of Seventh Avenue between 45th and 46th streets, Moody’s said.
Goldman Sachs, Bank of America and Bank of Montreal are among the banks originating the CMBS loan, the bond-rating firms said.
A spokesperson for Vornado declined to comment.
The refinancing comes as CMBS issuance picked up last year after high interest rates and tight lending standards curbed activity in 2022 and 2023, according to data firm Trepp. CMBS issuance in 2024 more than doubled to $108 billion from $40.3 billion.
The New York retail and tourism sectors have shown strong signs of rebound from the pandemic. The city’s tourism arm has said the visitor level last year reached 97% of its record-setting level pre-pandemic.
Still, properties such as 1535 Broadway aren’t without credit challenges.
For instance, while asking rents for the Times Square area have recovered to pre-pandemic levels, the average asking rent for ground-floor space last fall fell about 23% to $1,854 per square foot from a peak of $2,413 in spring 2015, Moody’s said.