Not a single one of Greater Washington's most active commercial real estate developers turned out Wednesday morning to cast a bid at the foreclosure sale for Vornado Realty Trust's 2.6 million-square-foot Skyline complex in Baileys Crossroads. Lacking a competing offer, the complex sold for $200 million to representatives of the noteholders that initiated the auction, which was held on at the main entrance to the Fairfax County Circuit Court.
Vornado had all but thrown in the keys at the struggling office park by George Mason Drive and Leesburg Pike, which is more than half vacant. Skyline's assessed value has fallen from a high of $680.6 million in 2009 to just about $323.4 million for Fairfax County's 2016 fiscal year. Vornado did not move to contest the foreclosure sale.
Vornado still owes about $140 million on the debt, according to CMBS debt tracker Trepp LLP, and the New York-based real estate investment trust said earlier this year the cash flow from its remaining tenants had fallen short of being able to cover the debt service on the property. Vornado Chief Financial Officer Stephen Theriot said in August the company stopped paying that debt to put the loan into default, setting the stage for Wednesday's auction.
Ballard Spahr attorney Kelly Wrenn, who represented the noteholders in Wednesday's sale, said there was a significant amount of interest leading up to the auction and that he had expected to see at least one or two bidders. It's unclear for how long the property will stay in the noteholders' hands before coming back out to the market.