Vornado Realty Trust has lost $2 million selling out its share of the former Filene’s department store redevelopment project in Boston, which the firm demolished but failed to rebuild.

Vornado sold its 50 percent share in the Downtown Crossing site to Millennium Partners. Millennium has built such Boston landmarks as the Ritz-Carlton hotel and towers in Downtown Crossing, helping facilitate that areas’ revival, and is in the homestretch of building 256 residences nearby at the corner of Washington and Avery streets. 

Vornado received net proceeds of approximately $45 million, resulting in the $2 million net loss. Millennium took over the project early last year to redevelop the former Filene’s department store site. That happened after Vornado got on the wrong side of Boston Mayor Thomas Menino after the developer demolished the Filene’s building in the heart of the city’s shopping district and let the site languish as an empty lot for several years.

Now, Millennium is starting the process to build a 625-foot residential tower on the site. Advertising agency Arnold Worldwide is working on a lease at the adjacent Burnham Building, first reported by Banker & Tradesman here, and sources close to the deal told a reporter the Arnold transaction would likely provide the anchor tenant to secure financing and begin construction on the tower.  

This is not the first time Millennium has purchased local real estate from Vornado. In July, Millennium agreed to buy the 550,000-square-foot Boston Design Center in the city’s Marine Industrial Park from Vornado in a portfolio sale. While a specific purchase price was unknown, industry experts estimated the center would sell for no more than $80 million. In July, Jon Davis, head of the Davis Cos., said Millennium would probably not buy the building for much more than the debt.

Vornado paid $24 million in cash and used a $72 million mortgage to cover the remainder of the purchase price of $96 million to pay former owner The Davis Cos. in 2005. Davis acquired the design center for $34 million in 1999, according to the company’s website. The real estate firm took out a $70 million-plus loan on the property.