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Deals & Dealmakers

SL Green celebrates $1B Thanksgiving

SL Green is closing out Thanksgiving Week with $1 billion is sales.

The company has entered into a contract to sell a 43 percent interest in 1515 Broadway to affiliates of Allianz Real Estate, the real estate investment and asset manager within the Allianz Group.

And the cityʼs largest commercial property owner is selling 600 Lexington Avenue outright for $305 million, or $1,005 per square foot.

The deals are being viewed as a sign of the continued strength of the New York office market where capital values continue to witness appreciation, jumping 11 percent year-on-year to $1,213 psf, according to Colliers International 3Q report.
The 1515 Broadway deal values the 1.86 million-square-foot, Class-A Times Square office building at $1.950 billion, or $1,045 per square foot.

Approximately 70 percent of the transaction is expected to close on November 30, 2017. The balance is scheduled to close in the first quarter of 2018 when SL Green said it will realize cash proceeds of approximately $416 million.
The companyʼs co-chief investment officer, Isaac Zion, said, “1515 Broadway has been an extraordinary investment for SL Green and we are delighted to collaborate with our new joint venture partner, Allianz, in one of New York City’s truly special buildings.

“We look forward to a long-term, mutually beneficial relationship with Allianz on 1515 Broadway and to future investment opportunities together.”

Allianz Real Estate of America’s Chief Executive Officer, Christoph Donner, said, “Allianz’s investment in 1515 Broadway represents a unique and exciting opportunity to partner with SL Green and add an attractive trophy asset, with significant upside in the coming years, to our growing portfolio in New York City.”

SL Green purchased 1515 Broadway as part of a joint venture in 2002 and acquired full control of the building in 2011. In 2012, following a major redevelopment of the property that included the re-positioning of all retail space, a new lobby, elevators and state-of-the-art signage, Viacom signed a long-term lease renewal and will occupy the building’s office space through 2031.

The 57-story building is currently 98 percent leased and is home to retail tenants Skechers, Swatch, Oakley, Kiko Milano, and Line Friends along with the Minskoff Theater, one of the city’s largest live performance theaters and host to The Lion King – the highest grossing show on Broadway.

Doug Harmon and Adam Spies of Cushman and Wakefield represented SL Green in the deal. Meanwhile, Darcy Stacom of CBRE represented SL Green the sale of 600 Lexington Avenue for $305 million to a U.S.-based insurance company.

The 36-story, 303,515 s/f Midtown Manhattan office building made $1,005 psf and will net SL Green $292 million.

According to Zion, “The sale of 600 Lexington represents the culmination of a strategic approach that started with a distinct business plan to make targeted capital improvements in order to increase occupancy and improve the rent profile of the building, and now ends with the opportunity to redeploy the net proceeds we’ve generated into other investment prospects.

“This transaction not only completes an exceptional investment for us, it further demonstrates continued investor demand for East Midtown assets.”

SL Green acquired the property in May 2010 for $193 million, through a joint venture, and subsequently took full ownership of the property in December 2015. The property is currently 99 percent leased. Major tenants include MKP Capital Management, Element Capital Management, and Hawkins Parnell Thackston & Young

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