In an UpClose interview with GlobeSt.com, Marc Holliday, president and chief executive officer of SL Green, labeled Manhattan "the best office market in the country." Of this acquisition he says he expects the acquisition "will provide a steady stream of earnings for years to come, along with substantial upside in conversion and development opportunities."
The 1.2-million-sf South Building is 95.5% net leased to Credit Suisse First Boston through 2020, while the 267,000-sf North Tower is zoned for residential and office use. The locally based REIT will initially own 100% of the office component of the project, but intends to bring in a partner for up to a 50% interest.
SL Green and CSFB currently intend to physically separate the South Building and the North Tower and convert the North Tower to residential condominiums.Andrew Mathias, chief investment officer of SL Green, notes that park views, small floor plates and high ceilings makes the building an ideal candidate for residential use. SL Green and CSFB will share in the profits of the residential component.
Air rights could provide for the development of approximately 470,000 sf of additional space in the Flatiron District. CSFB also provided financing for the acquisition. SL Green will use up to $805 million to fund the acquisition and development of the project, of which the company has obtained $690 million of 15-year fixed rate financing.
When announcing its proposed $11.5-billion acquisition of Citigroup's Traveler's Life and Annuity at the beginning of the year, MetLife said it could finance the cash portion of the transaction through a combination of cash on hand, debt, mandatory convertible securities and selected asset sales. The company then gave CB Richard Ellis the task of marketing 1 Madison, while Cushman & Wakefield was selected to market 200 Park. CBRE's Darcy Stacom, William Shanahan and Paul Leibowitz of CBRE acted as exclusive agents for MetLife in this sale which is scheduled to close in approximately 30 days.
According to sources, the second round of bids for 200 Park Ave. was completed yesterday. Bids were said to be in the neighborhood of $1.7 billion.
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