NYU Langone Buys Leasehold Interest in Manhattan’s 333 E. 38th St. Office Building for $145M
- Jun 06, 2014
NYU Langone Medical Center has completed the acquisition of the leasehold interest in Manhattan’s 333 E. 38th St., the 476,200-square-foot office building where it occupies more than 170,000 square feet, from SL Green. The price tag: a $145 million.
Originally developed in 1928, 333 E. 38th, which is also known as 673 First Ave., was transformed from a warehouse into an office destination featuring 26,000 square feet of retail space in 1990. NYU Langone has had space in the nearly fully leased building since 2006 and shares the tenant roster with the likes of New York Presbyterian Hospital and the South African Consulate General.
NYU Langone’s acquisition of the leasehold comes approximately two years after SL Green closed a 50-year extension of the ground lease to 2087. The purchase provides the medical center with expanded operational control and a substantial decrease in occupancy costs.
“[It] allows them to take control of a building that serves as such a critical asset for the medical center,” Bruce Mosler, Chairman of Global Brokerage with commercial real estate services firm Cushman & Wakefield, said in a prepared statement. C&W represented NYU Langone in the transaction.
For SL Green’s part, the sale of the leasehold interest in 333 E. 38th/673 First marks both a parting of ways with one of the last remaining assets held at the time of the REIT’s initial public offering in 1997, as well as another step in its strategy of accretively recycling capital.
“Our returns on 673 are truly incredible, a 13.6 percent unlevered IRR over the 16 or so year-period since our IPO,” Andrew Mathias, president of SL Green, said during the company’s first quarter earnings call in April. Proceeds from the disposition of 333 E. 38th will be invested in a fee position at the office building 635 Madison Ave.