SL Green to Sell NYC Office Condo for $633M
- Apr 13, 2018
Just more than a decade after adding 1745 Broadway to its prominent Manhattan portfolio, SL Green Realty Corp. has inked a deal for the disposition of the 674,000-square-foot leasehold office condominium. SL Green and joint venture partner Ivanhoé Cambridge will sell the asset to an institutional client of Invesco Real Estate for $633 million.
1745 Broadway is a 100 percent leased trophy asset in bustling Midtown—and SL Green has its reasons for walking away from it. “After securing a long-term lease extension with investment grade tenant Random House and stabilizing the asset, we determined that this was the right time to monetize our success with the property and redeploy that capital into more accretive investment opportunities, including our share repurchase program,” David Schonbraun, co-chief investment officer with SL Green, said in a prepared statement.
If all goes as planned, SL Green and Ivanhoé Cambridge will complete the sale of 1745 Broadway before the close of the second quarter. Designed by Skidmore, Owings & Merrill, the 930,000-square-foot 1745 Broadway first opened its doors in 2003, featuring office accommodations on floors two through 25 of the 50-story tower, which also includes retail space, a parking garage and a residential condominium segment with a separate entrance.
SL Green’s history with 1745 Broadway dates back to 2007 when the REIT acquired a 32.26 percent interest in the office property for $65 million. Seven years later, the company increased its interest to 56.88 percent. And the property’s anchor tenant has stayed for the ride. In 2016, the REIT landed a commitment from Penguin Random House to continue to occupy more than 600,000 square feet through June 2033. Investment manager PDT Partners takes up the remaining space on the tenant roster.
Sticking with the program
In 2016, SL Green announced a $1 billion stock repurchase program—increased to $1.5 billion in late 2017—and the company has since been selling certain assets to amass proceeds for the buy-back. In conjunction with the 1745 Broadway announcement, SL Green revealed it has entered into separate contracts to sell two Westchester County, N.Y., office properties for an aggregate $67 million: the 178,000-square-foot 115-117 Stevens Ave. in Valhalla and the six-building Reckson Executive Park in Rye Brook.
The dispositions of the two suburban assets and 1745 Broadway will yield SL Green net proceeds totaling approximately $190 million. During the company’s fourth-quarter 2017 earnings call on January 25, Marc Holliday, CEO of SL Green Realty Corp., said, “A liquid financing market benefits us and our ability to generate above-average returns. I just think, right now, rather than increasing balances, we’re seeing the stock buy-back program as a better place to deploy our capital.”
SL Green’s repurchasing total since commencing the buy-back program is 12.2 million shares and counting. Even with additional assets identified for disposition, the company remains New York City’s largest office landlord.
Image courtesy of SL Green Realty Corp.