Eastdil Realty managing director Douglas Harmon was the exclusive sales advisor for the transaction, which closed late last week. As part of the $222-per-sf deal, SL Green invested $6 million in the purchasing entity. The move will give SL Green the best of both worlds by allowing the firm to receive a high current rate of return on a new investment while taking a capital gain on the sale.
The buyer is an investment group whose principals are members of the Sitt and Sutton families. The locally based Sitt-Sutton group is an under-the-radar investor in New York real estate assets.
An industry source familiar with the sale tells GlobeSt.com the transaction is "a bellwether for New York" because it represents a resurgence of interest in class B office assets that aren't "overly sexy," but are nonetheless perceived as solid long-term investments.
"This deal, and people knowing about this deal, is pushing more of the B product," the source tells GlobeSt.com. "It also shows a trend in which people are buying hard assets that they can lease up slowly and own long term. There's a lot of pent-up demand."
SL Green and MSREF bought the 239,115-sf building in January 2001 for $45.7 million. "We were able to create significant value in a short period of time by enhancing the operating efficiencies of the property and by taking advantage of strong investor interest in Midtown Manhattan," says SL Green president Marc Holliday.
Located on the southeast corner of W. 36th Street and Seventh Avenue in the Times Square South/Penn Station district, the property is anchored by the MTA, which occupies roughly 25% of the building with four full floors. Other tenants of the 99%-occupied prewar asset include Cranston Print Works, Bechtel Infrastructure Corp. and Printmaker International Ltd.
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