SL Green, RXR to Buy Stake in NYC’s Worldwide Plaza
- Sep 18, 2017
New York City’s largest office property owner just added some prime square footage to its holdings. SL Green Realty Corp., along with joint venture partner RXR Realty, entered into an agreement to acquire a 48.7 percent interest in Worldwide Plaza, a 2 million-square-foot mixed-use asset in Midtown Manhattan. The partners will purchase the stake from New York REIT in a transaction that values the property at just over $1.7 billion.
“The acquisition of Worldwide Plaza allows us to expand our footprint on Manhattan’s West Side through investing in a Class A asset that is fully leased to institutional tenants,” David Schonbraun, co-chief investment officer with SL Green, said in a prepared statement. Spanning a full block at 825 8th Ave., the Skidmore, Owings & Merrill-designed Worldwide Plaza made its debut in 1989 and comprises a 1.8 million-square-foot office tower standing 49 stories tall, and a 252,000-square-foot retail building featuring such offerings as a five-stage off-Broadway theater and a 475-space parking garage.
Worldwide Plaza garnered a great deal of attention when NYRT, which is in the midst of selling off assets as part of a liquidation plan for maximizing shareholder value, put the property on the market in anticipation of increasing its 48.9 percent stake to 98.8 percent with the $276.7 million acquisition of a 49.9 percent indirect equity interest in June 2017. The majority of those interested parties, however, were interested in a property sans the existing $875 million of undesirable debt attached to it. Unsuccessful in reasonable attempts to deliver Worldwide Plaza unencumbered, NYRT rethought its approach. “It became apparent that the opportunity for NYRT to partner with one of them and participate in the upside value creation for repositioning and critical leasing was an avenue worth exploring as a means to maximize value for NYRT’s shareholders,” Wendy Silverstein, CEO of New York REIT Inc., said during the company’s September 14 conference call on the purchase agreement.
Partners and plans
If all goes as planned, SL Green and RXR will be co-owners of the property with NYRT and passive investor WWP Sponsor LLC, which will hold a 50.1 percent and 1.2 percent stake, respectively. “[SL Green and RXR] are willing—alongside us, dollar for dollar—to put in up to call it $160 million of capital,” Silverstein added during the call. “These guys, I’m sure you’re familiar with them and most of you are, are in the game to make money and make a lot of money. We’re going to be the co-beneficiary of that.”
SL Green and RXR’s acquisition of a notable interest in Worldwide Plaza is on track to close on or before November 3, 2017.