SL Green, Citigroup Agree on Early Purchase of Office Campus in Manhattan
NEW YORK — SL Green Realty Corp. (NYSE: SLG), New York City’s largest commercial property owner, has reached an agreement with an affiliate of Citigroup Inc. (NYSE: C) to accelerate the sale of the global bank’s office campus at 388-390 Greenwich St. in Manhattan’s Tribeca neighborhood. The early sale is pursuant to the $2 billion purchase option that Citigroup exercised in January.
Separately, SL Green announced that it has reached an agreement for the early termination of Citigroup’s lease at the property as a result of the sale acceleration. The sale is now scheduled to close in June.
SL Green will realize approximately $1.8 billion in sale proceeds at closing, including the lease termination payment. The REIT plans to repay a portion of its corporate credit facility and retire the $1.45 billion mortgage on the office campus.
“We are pleased to reach an agreement on the early sale of 388-390 Greenwich Street. In addition, by retiring approximately $1.8 billion of debt, we further strengthen our balance sheet and enhance our liquidity position to in excess of $1.4 billion,” says Marc Holliday, CEO of SL Green. “Our longstanding, multi-faceted relationship with Citi, one of the world’s leading financial institutions, has been mutually rewarding and we look forward to continuing this important relationship for many years to come.”
Located along the Hudson River, 388-90 Greenwich St. is the two-building campus headquarters for Citigroup’s divisions of global wealth management and global trading, according to SL Green.
In 2013, Citigroup moved its global headquarters from 399 Park Ave. in Midtown Manhattan to the Tribeca campus in a $1 billion deal, according to Crain’s New York. Citigroup originally owned 388-390 Greenwich but sold the properties to a partnership between Ivanhoe Cambridge and SL Green in 2007 for $1.6 billion.
As of Dec. 31, 2015, SL Green held interests in 121 Manhattan buildings totaling 48.3 million square feet, including ownership interests in 30.5 million square feet of commercial buildings and debt and preferred equity investments secured by 17.8 million square feet of buildings. In addition to its Manhattan investments, SL Green held ownership interests in 33 suburban buildings totaling 5.1 million square feet in Brooklyn, Long Island, Westchester County, Connecticut and New Jersey.
The REIT’s stock price closed on Wednesday, April 20 at $102.20 per share, down from $128.12 per share at this time last year.
Citigroup has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. The global bank reported net income for the first quarter of 2016 of $3.5 billion on revenues of $17.6 billion, down from net income of $4.8 billion on revenues of $19.7 billion in the first quarter of 2015. Citigroup’s stock price closed on Wednesday at $46.73 per share, down from $52.48 per share at this time last year.
— John Nelson