By far the largest of the two acquisitions is the 1.1-million sf News Building, 220 E. 42nd St., which sold for $265 million or $242 per sf. In-place rents at the 100% leased asset are $32.85 per sf, with 18% of the leases set to roll over within three years. Tenants at the Raymond Hood-designed art deco tower include Omnicom Group, which leases 40% of the property, Tribune Co., WPIX-TV and Verizon.
SL Green president Marc Holliday called the News Building "a cornerstone property in the Grand Central and United nations marketplace," adding, "This transaction demonstrates our ability to convert structured-finance investments into wholly-owned assets on a pre-emptive basis."
In a separate deal, SL Green is acquiring condominium interest comprising 15 contiguous floors at 125 Broad St. for $90 million or $172 per sf. The 524,500 space is 100% leased. Salomon Smith Barney occupies 63% of the space, while Fahnestock & Co has 13%. Less than 10% of the leased space expires prior to 2010.
"We believe that we are making a conservative investment in the recovery of the Downtown market," Holliday stated "There is a national resolve, supported by over $20 billion in grants with $5 billion earmarked to create a state of the art transportation infrastructure, to restore Downtown as one of the pre-eminent office markets in the United States."
SL Green has closed on a $150 million unsecured five-year loan in connection with the two acquisitions. Wells Fargo is providing the financing, $100 million of which SL Green drew down at closing. Proceeds will be used to pay down outstanding lines of credit.
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