SL Green is selling a chunk of New York real estate to help finance its nearly $2.3 billion purchase of 11 Madison Avenue.
The company announced Monday it would sell Tower 45, the office building located at 120 West 45th Street, for $365 million, or approximately $830 psf
And it has formed a joint venture with Invesco Real Estate for the ownership of 131-137 Spring Street, a 73,000 s/f mixed-use asset located in SoHo.
Under the terms of that agreement, Invesco will acquire an 80 percent stake in the property, with SL Green retaining a 20 percent ownership interest as well as management and leasing responsibilities. The transaction values the property at $277.8 million.
The deal will net SL Green in excess of $400 million, money it will put towards its purchase of 11 Madison from the Sapir Organization and CIM Group,
SL Green President Andrew Mathias commented, “As illustrated by these transactions, the demand for high-quality commercial assets in the Manhattan market continues to be very strong, even as interest rates have risen in recent months.
“Our intention is to fund the Company’s pending acquisition of the iconic 11 Madison property through a strategic combination of property sales, joint ventures, new financing and existing property debt refinancings, while retaining substantial cash for other investments in the pipeline. These transactions announced today are consistent with that plan.”
The 440,000 s/f Tower 45 was acquired by SL Green in 2007 as part of the merger with Reckson Associates.
Subsequently, the company executed a capital improvement program that repositioned the property. Tower 45 is currently 96.2 percent leased.
Richard Baxter of Jones Lang LaSalle and Darcy Stacom of CBRE represented SL Green in the sale.
131-137 Spring Street, a six-story building in the SoHo shopping district, features 100 ft. of ground floor frontage on Spring Street and houses the multi-level flagship stores for Diesel and Burberry while the balance of the building includes office space and residential rental units.
Isaac Zion, co-Chief Investment Officer of SL Green, commented, “Not to be overshadowed by the bigger strategic picture — we are very pleased to be forming this new venture with Invesco in SoHo. We hold the Invesco real estate investment organization in extremely high regard and their New York team shares our vision for this prime asset.
“ We look forward to working with them in an effort to create even greater value in this incredibly well-positioned property, taking full advantage of its deeply embedded growth potential as the area’s positive momentum continues.”
SL Green announced earlier this year that it would buy 11 Madison Avenue for $2.29 billion in one of the biggest real estate transactions ever in New York City.
The 29-story, 2.3 million-square-foot property is between 24th and 25th streets in the Flatiron section of midtown south, overlooking Madison Square Park. The real estate investment trust will also pay about $300 million in costs tied to lease-stipulated improvements at the tower.
The deal is the biggest for a single building in Manhattan since the 2008 acquisition of the General Motors Building for $2.8 billion, and the second-largest in U.S. history, according to research firm Real Capital Analytics Inc.
The purchase allows SL Green, New York’s biggest owner of office buildings, to increase its dominance in midtown south, the area roughly from 30th to Canal streets, where office-vacancy rates have been the lowest of any central business district in the country.