SL Green to Trade Midtown Manhattan Office Building for $123.2M
- Sep 08, 2010
September 8, 2010
By Barbra Murray, Contributing Editor
Continuing its portfolio repositioning strategy, New York City-based SL Green Realty Corp. has inked a deal to sell the 292,000-square-foot office building at 19 West 44th Street to Deka Immobilien for $123.2 million.
SL Green will turn a none-too-shabby profit on the disposition, pocketing net proceeds of $118 million after having acquired the property for $67 million in 2004. Originally developed in 1916, 19 West 44th underwent a renovation program that paved the way for the REIT to increase the building’s occupancy level from 86 percent to 99 percent. The 18-story tower’s lengthy tenant roster includes international diamond manufacturing and distribution company Lazare Kaplan International, engineering firm Robert Derector Associates and tax consultant Urbach Kahn Werlin Advisors. Presently, 3,500 square feet of space is available for lease, with an additional 725 square feet on the market for occupancy in October, according to SL Green’s website.
While Manhattan is slowly emerging from the debilitating global economic crisis-induced repression, a nearly full tenant roster in the city is still nothing to sneeze at these days. The average overall vacancy rate is 10.8 percent in New York City and 11.5 percent in Midtown, according to a second quarter report by real estate services firm Cushman & Wakefield.
Proceeds from the sale of 19 West 44th Street will not be set aside for a rainy day. SL Green plans to use the funds to finance another step in its repositioning program. The REIT will reinvest the profits as part of a 1031 exchange involving its $330 million acquisition of 125 Park Avenue from Shorenstein Properties L.L.C.
Commercial real estate services firm CB Richard Ellis marketed 19 West 44th Street on behalf of SL Green and represented the company in the transaction with Deka Immobilien. CBRE did not exactly have to beg and plead for bidders. As Greg Hughes, SL Green CFO/COO, said during SL Green’s second quarter earnings call on July 27, there were “initial indications of interest from 15 bidders on the pending sale of 19 West 44th Street.” The deal with Deka Immobilien will not mark the end of SL Green’s association with 19 West 44th Street, as terms of the agreement allow the REIT to stay onboard to spearhead management and leasing activities.
SL Green has been spending the last several months selling assets to create a war chest for new acquisitions. The company struck a deal to purchase 125 Park Avenue from Shorenstein Properties L.L.C. for $330 million. SL Green also signed on to sell its 45 percent ownership stake in 1221 Avenue of the Americas and a newly acquired 45 percent joint venture ownership interest in 600 Lexington Avenue to Canada Pension Plan Investment Board for a respective $576 million and $87 million.