NEW YORK CITY-In closing on its $252.5 million acquisition of the HarperCollins Building in Manhattan’s Plaza District, SL Green Realty Corp. has sold a 45% stake in the 37-story, 309,000-square-foot tower to the Canada Pension Plan Investment Board, the company unveiled Monday morning. Under the transaction, CPPIB has made an equity investment of $57.4 million before closing costs, adjustments and working capital.
The deal marks the second joint venture for SL Green and the Canadian-based investment management organization. Previously, the team partnered up to acquire Manhattan Tower at 600 Lexington Ave. for $193 million in May 2010, online property records show.
Peter Ballon, vice president and head of real estate investments-Americas at CPPIB, says in a statement that the company is “delighted” to acquire a significant interest in another “high-quality and extremely well-located property which has the potential to be repositioned as a top boutique office property in Midtown Manhattan.”
The deal expands CPPIB’s real estate portfolio in New York City to interests in five office buildings in Manhattan total, including others such as McGraw Hill’s Headquarters at 1221 Sixth Ave., 100 Broadway and 655 Fifth Ave., a company spokeswoman confirms to GlobeSt.com.
Under the joint venture agreement, SL Green holds a 55% stake in 10 E. 53rd St. and will act as general partner, while CPPIB will handle the renovations and act as institutional partner at the site. The building, which is currently 91% occupied, will undergo a multi-million capital improvement program. New York Commercial Bank is providing the venture with a five-year, $125 million floating rate mortgage financing.
GlobeSt.com previously reported that leases for 60% of the property’s rentable square footage will expire over a three-year period, which will provide the REIT to take advantage of below-market rents. After the renovations are complete, SL Green will launch a new marketing and leasing campaign to bring the building back to market.
The purchase price of the property went for $647 per square foot. The seller, Milan-based Cariplo Pension Fund, advised by Hines, previously stated to GlobeSt.com that the sale permitted the company to “achieve significant results” in a “transparent and fast” process. The deal involved the collaboration of Hines’ Italian fund management arm, Hines Italia SGR, as well as Hines’ New York team. The seller was also represented by brokers Darcy Stacom and William Shanahan of CBRE.
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