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Vornado Spends 189 Million for Option to Buy One Mall, Acquire Another

It has paid $36 million for an option to buy Springfield Mall in Virginia and has agreed to buy Broadway Mall in Long Island for about $153 million.Vornado Realty Trust (NYSE: VNO) announced Monday that it paid $189 million to buy one mall and for an option to acquire another. The Paramus-based real estate investment trust paid $36 million for an option to buy Springfield Mall, a 79-acre, 1.4 million-sq.-ft. property in Springfield, Virginia. Separately, Vornado agreed to acquire the 1.2 million-sq.-ft. Broadway Mall in Hicksville, Long Island, for about $153 million, including $95.8 million of existing debt.

The Springfield Mall is anchored by Macy”s, J.C. Penney and Target. Vornado can exercise the purchase option upon the passing of one of the existing mall owners, and will then pay $80 million for the property, subject to an existing $181 million mortgage. The buyout, however, may be deferred by Vornado through November 2012. During the option period Vornado will manage the mall and can collect its net cash flow. The Broadway Mall, located on Route 106 off exit 41 of the Long Island Expressway, is anchored by Macy”s, Ikea, Target and Multiplex Cinema. The purchase of the option for Springfield Mall, and the acquisition of the Broadway Mall, are expected to close by the end of 2005.

Vornado shares traded at $80.28 in the morning.

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