SL Green Wraps Up $390.8M Purchase of Gramercy Assets

The company did not have to shell out cash for the entire purchase, which accounts for an aggregate 1.2 million square feet of premier space, as the deal included the assumption of $265.6 million in debt.

December 28, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user arndalarm

SL Green Capital Corp. further solidified its status as New York City’s largest office landlord with the completion of its $390.8 million acquisition of Manhattan office investments from Gramercy Capital Corp. The company did not have to shell out cash for the entire purchase, which accounts for an aggregate 1.2 million square feet of premier space, as the deal included the assumption of $265.6 million in debt.

The assets involved include the 607,000 square-foot Lipstick Building at 885 Third Avenue, which SL Green and Gramercy had acquired in 2007 for $317 million. SL Green paid $39.3 million for Gramercy’s 45 percent joint venture interest in the leased fee of the property and took on a $120.4 million mortgage debt. For $25.6 million in cash and the assumption of $86.1 million in mortgage debt, the REIT also picked up the 45 percent joint venture interest in the leased fee of 2 Herald Square, a 354,000 square-foot building that the partners had purchased in 2007 for $225 million. Additionally, SL Green acquired from Gramercy the entire leased fee interest in 292 Madison Avenue, a 193,000 square-foot tower, for $19.2 million plus $59.1 million of mortgage debt. SL Green once owned the building; the company had purchased the property along with 286 and 290 Madison Avenue for $51.1 million in 1999 and sold it to Metropolitan Real Estate Investors for $140 million in 2007.

SL Green and Gramercy also announced a $38.7 million mezzanine loan secured by equity interests in the Starrett-Lehigh Building, the 2.3 million square-foot high-rise at 601 West 26th Street.

“These transactions conclude an important consolidation in our ownership of land and improvements representing 1.2 million square feet of prime Midtown properties, all with long-term operating leases to third parties,” Andrew Mathias, president of SL Green, said when announcing the deal earlier this month. “As the Manhattan market continues its improvement, the depth of our capabilities and reach of our investment platform are an increasingly valuable component of our corporate strategy.”

For its part, Gramercy walked away from the disposition deal with $89.8 million in cash and about $39 million in restricted cash.