SL Green Agrees to $250M Recapitalization of Moinian’s Beleaguered Manhattan Office Property

The nearly 770,000-square-foot Midtown Manhattan office tower was just inches from the jaws of lenders.

October 26, 2010
By Barbra Murray, Contributing Editor

Already the largest commercial office property owner in New York City, SL Green further solidifies its position at the head of the table with a timely commitment to The Moinian Group for the $250 million recapitalization of Three Columbus Circle. The nearly 770,000-square-foot Midtown Manhattan office tower was just inches from the jaws of lenders.

The recapitalization of Three Columbus Circle, which carries the address of 1775 Broadway and spans an entire square block adjacent to the AOL Time Warner Center and Central Park, involves a standby mortgage commitment and a future equity interest in the building, an interest that is not currently being quantified.

With SL Green now onboard, Moinian can get back to the business of wrapping up its nearly completed $175 million conversion of the 83-year-old building into a premier office property with three floors of Class A retail space totaling as much as 80,000 square feet. It is a plan that Moinian kicked into high gear after buying out its partner’s 90 percent stake in the asset for $250 million in 2004. The finished product will attract a new crowd, but presently, Three Columbus Circle isn’t exactly raking in a mind-blowing steady income; the tower, which was emptied years ago to accommodate the redevelopment, is currently only 20 percent leased.

So, what attracted SL Green to Three Columbus Circle? A spokesperson for the REIT told CPE that the property is being developed into a world-class asset and that is why the company wants to invest in it and bring it to its full potential. The recapitalization marks another step in what appears to be one of the REIT’s new investment trends. “SL Green has been looking for alternative ways to invest capital, and they’ve been very successful in deploying capital into alternative investments with this type of return profile, more successful than many of the REITs we cover,” Dave Rodgers, an analyst with RBC Capital Markets, told CPE. “They did the same thing with 510 Madison Avenue and they saw a 55 percent return on that. These types of investments are better return opportunities than straight equity investment where near-term growth is modest in the current environment. They are making good use of their capital.”