SL Green Secures NYC’s 373 KSF Lease Renewal, Refinances Property for $230M
The city of New York has decided to stay put in in its 372,500-square-foot home at 100 Church St. in Manhattan, much to SL Green Realty Corp.’s delight. The transaction coincides with the office REIT’s refinancing of the 1 million-square-foot property to the tune of $230 million.
It’s a good time for New York and a great time for SL Green. “The leasing market remains pretty strong (in Manhattan), and I think the pace is consistent with historical averages,” David Schonbraun, co-chief investment officer at SL Green, told Commercial Property Executive.
The city’s decision to recommit to 100 Church in advance of the scheduled October 2014 lease expiration extends its occupancy for an additional 20 years, with the option of 15 more years. The municipality will continue to maintain its law department and Business Integrity Commission offices on floors 2 through 6 and 20 of the 1 million-square-foot building, which is 82 percent leased. Commercial real estate services firm CBRE Group Inc. represented the city in the transaction, while law firm Shearman & Sterling stood in for SL Green.
Leasing is not the only recent activity at 100 Church St. SL Green has also obtained a $230 million loan through Wells Fargo Bank for the refinancing of the property, of which the REIT became the sole owner in early 2010. The 10-year loan bears an interest rate of 4.675 percent, and SL Green will utilize the proceeds for general corporate purposes.
Manhattan office properties in general are attracting both big leases and lenders. “Within New York, there’s a lot of money coming from balance-sheet lenders; you can get fixed-rate, floating-rate, and you can get CMBS capital. So I think there’s plentiful debt capital in New York, especially for the right assets. I think outside New York it’s tough.”
SL Green’s Church St. news comes less than two months after the REIT announced two other leasing and financing transactions. In April, Viacom Inc. renewed its headquarters lease and expanded its space from 1.4 million square feet to 1.6 million square feet at 1515 Broadway. At the same time, SL Green closed a $775 million first mortgage refinancing of the 2 million-square-foot building through the Bank of China. April also brought Random House Inc.’s 361,044-square-foot lease renewal at the 700,000-square-foot tower at 1745 Broadway.