SL Green to Trade Minority Stake in 521 Fifth Office Building for $72M
By Barbra Murray, Contributing Editor
It’s a rare real estate investor that would not want a piece of Manhattan’s Fifth Ave. and SL Green, king of the New York City office landlords, is willing to share. The REIT just signed an agreement to sell a 49.5 percent equity interest in the office property at 521 Fifth Ave. to Plaza Global Real Estate Partners, a venture between Quantum Global Real Estate and LaSalle Investment Management, for $72 million.
The building at 521 Fifth first opened its doors in Manhattan’s Grand Central Terminal submarket in 1929, and the 39-story tower has since had its share of makeovers, including an approximately $25 million capital improvement program in 2007 that added extra shine to the building’s Class A office and ground-level retail offerings. As of the close of the third quarter this year, the occupancy level was 85.6 percent. SL Green is currently marketing available space for $55 to $65 per square-foot.
The announcement of the sale of a minority stake in 521 Fifth comes less than two years after SL Green snapped up the remaining 49.9 percent interest in the property from joint venture partner City Investment Fund L.P., a transaction that, after five years of co-ownership, left the REIT sole owner of the asset.
Plaza Global is on track to get its share of 521 Fifth prior to year’s end, at which point the existing $150 million debt on the property will likely be refinanced with a new $170 million mortgage. “The partial sale unlocks proceeds we intend to use to fuel our continued growth and allows us to benefit from the potential of this well-located, top-quality asset,” Andrew Mathias, President of SL Green, noted in a prepared statement. Eastdil Secured represented SL Green in the deal with Plaza Global.
For Plaza Global, the transaction will mark the core real estate investment joint venture’s second acquisition since its formation in February of this year. Keeping in line with its focus on assets in leading real estate markets across the globe, Plaza Global made its first purchase in London, snapping up the London Works Estate in conjunction with Wrenbridge Land for $13.7 million in August.
Still, it’s New York that tops the global investment list. For the second consecutive year, the city ranked as the largest investment market in the world, according to a recent report by commercial real estate services firm Cushman & Wakefield Inc. Sales for 2012 totaled $34.7 billion by mid-year.