NEW YORK CITY—SL Green Realty Corp. is making three acquisitions and simultaneously selling a property. The REIT entered into a contract to acquire the fee interest at 635 Madison Ave. for $145 million; it signed agreements to pick up two retail condominiums in the hip-and-trendy Soho area and is selling its leasehold interest at 675 First Ave.—also for $145 million. However, company officials say the sale and the Madison Avenue buy are unrelated.
The off-market transaction of 635 Madison is expected to be completed during the third quarter of 2014. The property is encumbered by a ground lease through April 2030 with one 21-year renewal extension option. The improvements of the fee interest include a 19-story 176,530-square-foot office tower occupied by a selection of office and medical tenants.
Meanwhile, the company entered into contract to acquire the 7,200-square—foot retail condominium at 121 Greene St. and a 5,218-square-foot retail condominium at 115 Spring St. The former asset is adjacent to Ralph Lauren's SoHo store and directly across the street from Apple's local flagship. It is fully occupied by two retailers, both at below market rents. The latter property, between Mercer and Greene streets, features grade-level and basement space leased at below-market rents through January 2017.
SL Green Managing Director Brett Herschenfeld says, “The SoHo submarket is experiencing a phenomenal surge in consumer demand driven by the appeal of the area's destination shopping experience by both tourists and New York City residents. We believe the outlook for long-term economic growth in this neighborhood is very strong.”
He continues, “These acquisitions position us well to participate in growth in the SoHo submarket going forward. We will continue to seek new opportunities in New York City's best retail locations.”
Lastly, SL Green Realty Corp. has agreed to sell its leasehold interest in 673 First Ave. for $145 million, reflecting a capitalization rate of 4.7%. The sale of the 422,000 square foot office building is expected to close during the second quarter. NYU Hospitals Center is the buyer and also the primary tenant at the building, along with NYU School of Medicine and New York Presbyterian.
The 673 First Avenue leasehold was part of the original SL Green portfolio at the time of the Company's IPO in August 1997. In September 2012, the company completed an extension of the ground lease to 2087.
Say SL Green Co-CIO Isaac Zion, "The transaction announced today marks the end of a long and successful investment. With the ground lease extension in 2012, we laid the ground work to unlock substantial value in the building. We believe this is the ideal time to monetize our position and redeploy the proceeds into another value generating asset.”
Cushman & Wakefield's Bruce Mosler, Michael Rotchford, Mark Mandell and David Heller represented the buyer in this transaction. Fried, Frank, Harris, Shriver & Jacobson LLP acted on behalf of SL Green for this transaction.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
