NEW YORK CITY-When Stephen L. Green started his career in the early 1980s, he openly admitted that he “knew nothing about real estate.” But today, SL Green Realty Corp. owns interests in 57 Manhattan properties totaling more than 33.6 million square feet, making it the first and largest publicly-traded REIT solely focused on New York City.
However, Green’s foray into the commercial real estate space had humble beginnings. “I took old buildings that very few people buy, took capital and rented them for much less than the trophy buildings in Midtown Manhattan,” Green said during “Inside the Real Estate Mind,” a one-on-one conversation with ALM Real Estate Media Group’s vice president and group publisher Michael Desiato at the 10th Annual RealShare New York conference at the Marriott Marquis Hotel on Wednesday morning. "It was a story the rest of the country liked," he added.
After turning around underperforming loft buildings throughout the city, Green formed the REIT in 1997 to continue the commercial real estate business of SL Green Properties Inc., a company that was founded in 1980 by Green. “I needed the capital, and I wanted to control my own destiny,” he said, noting that he never had an interest in going private. “In those years, going public meant raising an enormous amount of capital and still controlling your own business.”
Recently, the REIT formed a joint venture with Stonehenge Partners to acquire eight retail and multifamily properties on the Upper East Side and Midtown East for $416 million. SL Green has also teamed up with retail titan Jeff Sutton, entering a 70-year leasehold at 1560 Broadway in the heart of Times Square’s booming youth-oriented retail market. The JV plans assemble up to 48,897 square feet of retail space that will be combined, upgraded and repositioned with 1552 Broadway.
Green explained that these recent transactions were all about “trusting your own instincts” rather than following market fundamentals alone. “It is easy to buy at the top,” Green said. “The real secret if you want to want to own real estate is to buy when nobody else is buying, and you sell when everybody is buying,” he adds. “You have to buy when the market is down.”
Over the last two years, SL Green added 12 properties, representing $4.5 billion of transaction values. Green said the REIT sees redevelopment and lease-up potential at 3 Columbus Circle, 600 Lexington Ave., 125 Park Ave., 100 Church St. and 280 Park Ave, among several others. He explained that 3 Columbus in particular is garnering “a lot of interest,” but he is “unsure” if the battle for title there was worth the fight. “I can only tell you that it’s 600,000 vacant square feet in an extraordinary location,” Green said. “That big block is unusual for that location, and we will lease it in the next four to five months.”
On the investment side, he advised young entrepreneurs to make a deal when the time is right. “And don’t fall in love with your real estate,” he said. “Real estate is cyclical. There are commodity buildings, and there are irreplaceable assets. You have to be smart enough to know what’s an irreplaceable asset and what’s not.”
For more RealShare New York coverage, be sure to check GlobeSt.com tomorrow morning.
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