JV Sees $40M Profit on $92M-Plus Office Asset Sale

NEW YORK CITY-SL Green Realty Corp. and Morgan Stanley Real Estate Fund III, LP has agreed to sell the last of four properties the joint venture partners purchased since it formed in 1999. The latest transaction involves the disposition of 180 Madison Ave. for $92.7 million.The 24-floor office asset, with approximately 254,000 sf, traded to the Sitt family approximately $350 per sf. The joint venture purchased the property in December 2000 for $41.2 million and expects to see an estimated $40-million gain from the sale. After giving effect to SL Green’s incentive fees within the joint venture, the company is entitled to 68% of all cash proceeds in excess of debt repayment, according to a company statement. Officials at SL Green could not be reached for more details on the sale by GlobeSt.com’s deadline.According to GlobeSt.com research, the office property rental rates average around $43 per sf.In addition to 180 Madison, SL Green and MSREF acquired three other properties, spending a total of $150 million, since it formed in 1999. The other three properties–90 Broad St., 469 Seventh Ave. and 321 W. 44th St.–have already been sold by the joint venture. Although details on all the sales were not available, the partners sold 469 Seventh Ave. to an investment group whose principals are members of the Sitt and Sutton families for $53.1 million in June 2002, as previously reported by GlobeSt.com. The transaction equaled $222 per sf for the 239,115-sf building.The two firms continue to capitalize on other opportunities with a second joint venture between SL Green and City Investment Fund, an affiliate of MSREF. To date, the new venture has purchased 19 W. 44th St. and 485 Lexington Ave.

Brian Ezratty and Peter Hauspurg of Eastern Consolidated Properties, Inc. and Douglas Harmon of Eastdil Realty represented the seller in the transaction. This is the fourth deal Harmon has brokered between SL Green and the Sitt. The other deals, including 469 7th Ave., were the sale of 1370 Broadway for nearly $59 million in 2003 and the sale of 1466 Broadway–also known as 6 Times Square–for $160 million.