The 18-story property is situated on Ninth Avenue between 34th and 35th streets. Since acquiring the property in 1998 for $31.7 million, shortly after SL Green's initial public offering, the company invested approximately $24 million of additional capital in a targeted repositioning plan that, according to a statement, helped attract and retain the property's three largest tenants: B&H Photo, Duane Reade and eEmerge. The property is currently 100% occupied to other tenants including Kopff, Nardelli & Doff, EngenderHealth and Uncle Jack's Steakhouse.
For SL Green, the sale of 440 Ninth Ave. will generate a gain of approximately $111 million with a capitalization rate of 4.6%. The proceeds of this sale will be reinvested tax free as part of a 1031 exchange.
A source close to the deal tells GlobeSt.com that, according to previous company statements, in early 2007, SL Green indicated that it anticipated being "a significant net seller of non-core properties this year, with the proceeds being applied primarily to the Reckson acquisition." The Reckson Associates Realty Corp. and SL Green merger was a done deal this past January, when the company paid $31.68 for each of Reckson's shares.
The source adds that SL Green has a "history of maximizing value and harvesting substantial gains from its non-core investments, regardless and then reinvesting." In September, the company indicated that 440 Ninth Ave., along with 470 Park Ave. S., which sold for $157 million, were put on the market in late summer and that there appeared to be significant interest. The source says that both properties still had upside potential for SL Green to realize if current market conditions prevented a good enough price.
Andrew Mathias, president of SL Green, says in a prepared release that "the sale of 440 Ninth Ave. further showcases our ability to harvest gains in a tax efficient manner and redeploy capital into higher quality properties with greater profit potential. Despite widely-cited disruptions in the real estate finance sector--leading to much negative sentiment in the marketplace--we have been able to sell two non-core assets recently, 470 Park Ave. S. and now 440 Ninth Ave., thereby generating substantial gains to reinvest into our core portfolio."
Cushman & Wakefield represented SL Green on this transaction. The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2008. As of Sept. 30, SL Green owned 31 New York City office properties totaling approximately 22.4 million sf.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
