SL Green Refinances Manhattan’s 388-390 Greenwich St. for $1.4B
- May 19, 2014
Billion-dollar refinancings don’t happen every day but SL Green Realty Corp. just completed one. The office REIT has refinanced 388-390 Greenwich, the 2.6 million-square-foot Manhattan office complex occupied in its entirety by an affiliate of Citigroup Inc., to the tune of $1.45 billion. Proceeds will go to good use. Concurrent with the closing of the transaction, SL Green, co-owner of the two-building property, utilized a portion of the funds to wrap up the acquisition of the remaining 49.4 percent interest in the asset from Ivanhoé Cambridge in a deal valuing the consolidated investment interest at approximately $1.59 billion.
Big dollar signs but, for SL Green, as John Guinee III, managing director with brokerage and investment banking firm Stifel Nicolaus & Co. Inc., told Commercial Property Executive, “It’s sort of unexciting, non-controversial. It’s kind of business as usual [for SL Green].”
The new financing replaces the former $1.1 billion financing and came in the form of a new 7-year, mortgage–featuring an initial 4-year term and the option for three, 1-year as-of-right extensions–provided by a Citigroup-led consortium that included Bank of China, Wells Fargo, and Barclays.
To a certain extent, Citigroup’s name is all over 388-390 Greenwich, literally and figuratively. In addition to spearheading the financing, the company renewed its triple-net lease of the Tribeca-area property in December, extending its occupancy through 2035. Additionally, Citigroup laid the ground work to possibly become the owner of the 39-story high-rise and the adjacent eight-story tower; the December lease agreement provides the company with the option to purchase the buildings between Dec. 1, 2017 and Dec. 31, 2020 for a tidy $2 billion. Developed between 1986 and 1990, the property features premier office space and what is widely touted as some of the best trading floor space in Manhattan.
“From all the details available, we think [SL Green] executed a good transaction buying out their partner, and given the option by Citigroup to buy the property, the financing that they chose seems perfectly appropriate,” Guinee said.
For its part, Ivanhoé Cambridge, whose pre-merger entity, SITQ, had acquired the stake in 388-390 Greenwich in a joint venture with SL Green in 2007, walks away from the disposition with funds for reinvesting in other top properties in top U.S. markets, per terms of its current strategy.
“[SL Green] clearly didn’t steal the asset from Ivanhoé Cambridge,” Guinee added. “Those are smart people and they’re not going to leave anything on the table.”