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Deals & Dealmakers

SL Green sells share in $2.6B Eleven Madison Avenue

SL Green Realty Corp., New York City’s largest office landlord, announced that it has sold a 40 percent interest in Eleven Madison Avenue, to PGIM Real Estate, the real estate investment business of PGIM, Inc., the global investment management businesses of Prudential Financial, Inc.

The transaction values the 2.3 million square foot, Class-A Midtown South office property at $2.6 billion, inclusive of the costs associated with lease stipulated improvements to the property.
SL Green realized cash proceeds of approximately $480 million at closing, which will be used for debt reduction and other investment opportunities.

The partnership is seeking a modification to the mortgage on the property, which, if not obtained within six months after the closing, may result in SL Green repurchasing the sold interest from PGIM Real Estate.

The partnership expects the modification to be granted during the fourth quarter of 2016.
PGIM Real Estate has a one-year option to acquire an additional nine percent stake in the venture at the same gross property valuation of $2.6 billion.

SL Green’s co-Chief Investment Officer, Isaac Zion, commented, “PGIM Real Estate shares our vision for Eleven Madison Avenue, a truly premier asset, and we are delighted to continue our long-standing, mutually beneficial relationship with this latest venture together.”

Kevin R. Smith, head of Americas for PGIM Real Estate, said, “PGIM Real Estate’s investment in Eleven Madison Avenue represents a unique opportunity to partner with SL Green again and add to our portfolio another trophy-quality office property in Manhattan that will generate secure and stable income across market cycles.”

Eleven Madison Avenue is located directly east of Madison Square Park between 24th and 25th Streets, and spans one full city block, with park frontage offering unobstructed west-facing views.

The office building has access to public transportation, including walking distance to five major subway lines, while the Madison Square Park area offers an abundance of walkable dining, retail, hotel and residential options.

Darcy Stacom and William Shanahan of CBRE advised SL Green on the deal.

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