NEW YORK CITY — SL Green Realty Corp. has entered into agreements for three major office deals in Midtown Manhattan. First, the company will acquire 125 Park Avenue, a 26-story office tower, for $330 million. The building contains 651,000 square feet of Class A space that is 99 percent occupied by tenants such as Meredith Corp., FGIC Holdings, Reed Elsevier, Newmark Knight Frank and Canon Business Solutions, among others.
In addition, SL Green has agreed to sell its 45 percent, non-managing interest in 1221 Avenue of the Americas to the Canada Pension Plan Investment Board (CPPIB) for $576 million. The REIT first acquired an ownership interest in the tower in 2003.
Finally, SL Green has formed a joint venture with CPPIB for the ownership of 600 Lexington Avenue. CPPIB will purchase a 45 percent stake in 36-story, 303,515-square-foot tower. Last month, SL Green agreed to purchase the property for $193 million. Occupancy is currently 93.6 percent.
The 600 Lexington Avenue and 1221 Avenue of the Americas deals are expected to close this month, and the 125 Park Avenue deal is expected to close in the third quarter. SL Green plans to use the proceeds from the two sales to fund the purchases of 125 Park Avenue as well as the original 600 Lexington Avenue purchase. Additional proceeds will be used to reduce corporate debt and fund additional investments.
“For SL Green, the 1221 Avenue of the Americas deal will enable us to dispose of a non-managing ownership interest, monetize our investment gain, free up a significant amount of cash for future investments and further improve our balance sheet,” said Andrew Mathias, president and CIO of SL Green, in a statement. “Likewise, the joint venture structure for 600 Lexington Avenue will give us more flexibility to pursue near-term market opportunities. Also, as Manhattan's largest commercial landlord, we see 125 Park Avenue as a perfect fit with our other area properties.”
Fried, Frank, Harris, Shriver & Jacobson LLP represented SL Green in the 1221 Avenue of the Americas deal. Greenberg Traurig represented the REIT in the 125 Park Avenue deal and the joint venture with CPPIB. Darcy Stacom and William Shanahan of CB Richard Ellis also assisted with the Park Avenue deal.
— Coleman Wood