The company paid the long-term family ownership $400 million, a price described as “exceptionalˮ by the Cushman & Wakefield team who represented the sellers.
625 Madison Avenue spans the full block-front on the East Side of Madison Avenue between 58th and 59th Street.
The ground holds a 17-story, 563,000 s/f Class A office and retail tower that is 70 percent occupied by Polo Ralph Lauren.
According to the New York Post, which first reported the deal, SL Green holds the operating lease through 2054 and the current $4.6 million rent resets in 2022 and 2041. The Post reported the rent could jump to $50 million a year, given the rebounded real estate market.
“A ground lessor’s position in the Plaza District, New York’s epicenter, represents one of the safest options among all asset classes today,” said Brian Corcoran, executive vice president of Cushman & Wakefield.
Corcoran, along with Helen Hwang, Steve Kohn, Frank Liantonio, Marc Nakleh, Nat Rockett, Karen Wiedenmann and Sujohn Sarkar represented 625 Ground Lessor LLC in the sale.
Hwang said the pricing achieved represents a going-in yield of 1.15% based on contractual ground lease
payments through June 2022 – reflecting historically low interest rates, escalating land values due to the strength of the residential and retail market and the scarcity of ground lease offerings.
“The investment benefits from strong sponsorship, long-term upside and a truly irreplaceable location at the core of one of the most luxurious commercial, residential and retail corridors in the world,” she added.
According to Kohn, leased fee/ground lessor positions are rarely offered in Manhattan so the ground lease opportunity attracted the interest to investors around the world.
