[NYguy]

http://online.wsj.com/article/APa3f8...0b3cbfa61.html

Hotel Pennsylvania to be renovated, not razed

March 7, 2013

Although City Council approval of zoning changes for a tower to replace the 1,700-room hotel remains valid, the weak economy has led Vornado to switch gears.

"It's an interesting option to have, but it's not possible today," Roth said at an investor conference earlier this week. "We're not going to tear down the hotel. In fact, we're going to invest in it aggressively and try to make it into a really profitable, really good hotel."

Vornado declined to provide additional information about its plans for the building.

Roth, who will assume the additional role of CEO at Vornado on April 15, said the company is close to finding a partner and principal developer to help restore some of the hotel's former grandeur. The hotel is across from Madison Square Garden and Penn Station.

Vornado was near a deal in 2007 to build a tower to house new trading floors for Merrill Lynch, but the brokerage's board backed away from the plan days before it was expected to finalize the deal. Less than a year later, Merrill was on the verge of collapse when it was bought by Bank of America, as the economic crisis neared its peak. Vornado went ahead with designs for the building and received City Council approval for needed zoning changes in 2010.

Roth said at the Monday conference that the company now aims to develop the hotel as part of its strategy to drive up the value of the surrounding properties. "We're trying to make it an amenity to the area, where we have billions of dollars of assets surrounding it," he said.