Commercial office landlord SL Green has agreed to purchase 304 Park Ave. South, a 215,000 s/f mixed-use office and retail building for $135 million from a partnership headed by David Berley, chairman of Walter & Samuels Inc.
SL Green will acquire the property with approximately 50 percent cash and 50 percent Operating Partnership units. The deal is expected to close June 1, 2012.
The property is located on the southwest corner of Park Avenue South and 23rd Street directly across the street from SL Green’s One Madison Avenue in the Midtown South sub-district, an area with office vacancies under 6 percent. The property is close to Madison Square Park, Union Square, Gramercy Park and the Flatiron districts.
The property is 95 percent leased to a group of boutique office tenants, including global model management firm IMG Models. Retail tenants include H&R Block, Bath & Body Works and Time Warner Entertainment.
“We’ve been monitoring Midtown South carefully looking for acquisition opportunities, however the consistently tightening vacancy rates and substantial lease activity in the area have driven cap rates on marketed deals below our target investment thresholds,” said SL Green President Andrew Mathias in a statement. “This unique opportunity came to us because of the attractiveness of our Operating Partnership Units and our relationship with the seller. It’s a classic SL Green investment – off-market, potential repositioning, and creating value upon acquisition for both the Company and the seller. This is the fifth time in the past year we have used OP units in an acquisition, as sellers recognize the unique benefits of our currency.”
Walter & Samuels represented the seller.
Advisor for the transaction was Doug Harmon of Eastdil Secured.