(Reuters) - Vornado Realty Trust on Thursday sold a stake in a portfolio of prime New York retail properties along Fifth Avenue and Broadway in Times Square for about $1.2 billion in cash in a deal in which it retains majority control of the assets.
The transaction created a joint venture with unnamed institutional investors that valued the portfolio of seven retail sites and other assets at $5.56 billion, said Vornado, a real estate investment trust, said in a statement.
The retail assets are among the scarcest and most valuable in the world, Vornado Chairman Steve Roth said in the statement.
Vornado will be the general partner of the venture and own 51.0% of its common equity and 100% of its debt and preferred equity. Vornado will have a tax gain of about $735 million.
How the cash proceeds will be used was not disclosed. Vornado spokeswoman Wendi Kopsick did not immediately respond to a request for comment.
Two weeks ago Vornado said that $1.04 billion in proceeds from the sale of condos at 220 Central Park South will provide capital for its massive redevelopment of two office towers above Penn Station and a portion of the nearby Farley Post Office.
Family-controlled realty company Crown Acquisitions advised the investor group on the transaction and Haim Chera, a Crown principal, joined Vornado as its head of retail, Roth said.
Editing by Cynthia Osterman