SL Green Realty Corp., an S&P 500 company and New York City’s largest commercial property owner, just made two major transactions with an aggregate value of $642.8 million.
The first is an agreement to sell Tower 45, the office building located at 120 West 45th Street, for $365.0 million, or approximately $830 per square foot.
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The second is the formation of a joint venture with Invesco Real Estate (“Invesco”) for the ownership of 131-137 Spring Street, a 73, 000 square foot mixed-use asset located in SoHo. Under the terms of the 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.
Both transactions are expected to be completed in the third quarter, subject to customary closing conditions.
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. After re-positioning both of these assets to unlock additional value, we will realize in excess of $400.0 million of net cash proceeds from these transactions, which were executed at a blended cap rate of 3.3 percent”
The 440, 000-square-foot Tower 45 was acquired by SL Green in 2007 as part of the merger with Reckson Associates. Subsequently, the Company executed a significant capital improvement program that successfully repositioned the property. Tower 45 is currently 96.2% leased. Richard Baxter of Jones Lang LaSalle and Darcy Stacom of CBRE represented SL Green on this transaction.
131-137 Spring Street, a six-story building in the heart of the popular SoHo shopping district, features 100 feet 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, “These transactions fit perfectly with the acquisition of 11 Madison, which is well-leased for the long term and located in one of New York City’s strongest commercial office submarkets. As we indicated at our December Investor Conference, we expected to sell certain assets and create joint ventures for others during 2015 and deploy the proceeds into more accretive opportunities. Clearly, the pieces are coming together nicely.”