SL Green Sells Stake in 3 Columbus Circle to Moinian Group

NEW YORK CITY—SL Green will receive $233 million for the sale of its 48.9% interest in 3 Columbus Circle to the Moinian Group. The sale is expected to close in the fourth quarter of 2018.

In September 2010, the Related Companies had bought the $250 million debt on the property and was going to foreclose on the 25-story tower, which was financially distressed and nearly vacant, according to an Oct. 26, 2010 article in The New York Times. The paper reported Joseph Moinian filed a lawsuit, accusing his lender and Steven M. Ross, the chairman and founder of the Related Companies, of trying to steal the building at a fraction of its cost. The Related Cos. responded that the lawsuit was without merit and “designed to attempt to excuse the borrower’s default in its mortgage obligations.”

On Jan. 31, 2011, Commercial Real Estate Direct had reported SL Green made a $138 million equity investment in the property. In addition, the $248.2 million of debt, which was purchased by Deutsche Bank and Related Cos., was retired and replaced with an SL Green and Deutsche funded bridge loan. The dispute has been settled and Deutsche and Related had “relinquished all claims on the property” and Moinian withdrew its lawsuit.

SL Green, which was not a party to the lawsuit, invested in the property. At the time, SL Green valued the asset at roughly $500 million, according to The Wall Street Journal. With the deal, SL Green and the Moinian Group repositioned the property. After the capital program was completed in 2012, Young & Rubicam bought a 214,000 square-foot condominium interest for $143.6 million. The global marketing communications firm also signed a lease as the anchor tenant of the remaining 539,000 square-foot condominium. The property is currently 95% leased. It had been 20% occupied at the time of SL Green’s investment.

“The recent lease up of the vacant retail space marks the successful completion of SL Green and the Moinian Group’s repositioning of 3 Columbus Circle” says David Schonbraun, co-chief investment officer at SL Green. “With these significant improvements, we have transformed the property into a premier Columbus Circle asset, and have created substantial long-term value.”

He notes the rate of return was in excess of 15% on the investment. Schonbraun adds SL Green will invest the capital from the transaction in other opportunities.

The Wall Street Journal reports that SL Green has been selling off assets to raise cash to buy its public shares at what it considers to be discounted prices. The paper further reports that this year, it sold over $1 billion worth of assets, and at the end of June had purchased more than 15 million shares of its stock at an average price of $99.58 a share.

The Moinian Group purchased 3 Columbus Circle, which also has the alternate address of 1775 Broadway, in 1999 for $130 million. It was once known as the Newsweek Building, referring to the news outlet which left the building about a decade ago.

The property takes up the full block between Broadway and Eighth Avenue, and W. 57th and W. 58th streets and is close to the Columbus Circle roundabout. Its other major tenants include eMerge 212, Jazz at Lincoln Center, and the retail store Nordstrom.