SL Green Selling 625 Madison For $630M, Signs Big Leases On Park Avenue
SL Green is closing out 2023 with some of the year’s biggest office deals, pocketing more than $600M in its sale of a Plaza District office building and bagging two large new leases in Midtown East.
The office giant is under contract to sell its stake in the 17-story office tower at 625 Madison Ave. for $632.5M, according to a news release.
The sale is among the year’s biggest, with the price per SF for the Class-A office tower working out at $1,123. The buyer was a "global real estate investor," according to a press release.
The REIT owns the building in partnership with Winthrop Capital Advisors, The Real Deal reports. It will use the proceeds to pay down its corporate debt. Crain's New York Business reports that the buyer is the Related Cos.
In the sale announcement, SL Green said it and its partners are originating a $234.5M preferred equity investment in the building. It also left the door open for a possible conversion, calling it "currently" a 17-story, 563K SF office building.
"Whether properties are upgraded to state-of-the-art office or are converted into a multitude of other uses that are in high demand, the appetite for Class-A office properties in prime Manhattan locations remains strong and growing," SL Green Executive Vice President Brett Herschenfeld said in a statement.
The sale brings to a close the long saga of SL Green's battle for ownership of 625 Madison, which started nine years after it acquired the leasehold in 2004. That was when Ashkenazy Acquisition Corp. bought the ground underneath the building for $400M, planning to raise ground rent prices, per previous reporting from The Real Deal.
But earlier in the pandemic, Ashkenazy defaulted on a mezzanine loan, which SL Green acquired, then foreclosed on Ashkenazy's controlling entity, taking over control of the ground and the building this summer.
SL Green also announced the signing of two significant leases at two of its Park Avenue holdings.
Investment bank PJT Partners signed a renewal and expansion for 270K SF at 280 Park Ave., a 1.25M SF office tower that SL Green co-owns with Vornado Realty Trust, the New York Post reported. The 43-story property recently underwent a $150M redevelopment and modernization, including the creation of a full-block lobby and a suite of tenant amenities.
CBRE’s Mary Ann Tighe, Ken Meyerson, Brendan Herlihy, Eric Thomas and Marlee Teplitzky, alongside JLL’s Evan Margolin, brokered the deal on behalf of PJT, while SL Green’s Steven Durels, Vornado’s Glen Weiss and a CBRE team of Peter Turchin, Greg Rothkin and Jason Pollen repped the landlord.
SL Green also signed international alternative investment firm Stonepeak Partners to 77K SF at 245 Park Ave., according to a release. The lease gives Stonepeak the entire 31st and 32nd floors of the 1.8M SF office building, which spans 48 stories.
The landlord is also investing in 245 Park Ave., where it is planning a redevelopment that will add tenant amenities including a wellness center, new windows, a new lobby, new elevators and an overclad of the Park Avenue facade.
CBRE’s Silvio Petriello, Ben Friedland and Tamika Kramer repped Stonepeak in the lease, while Cushman & Wakefield’s Patrick Murphy, Bruce Mosler, Tara Stacom, Harry Blair, Ron LoRusso, Justin Royce and Will Yeatman repped the landlord.
The deal brings 245 Park Ave.’s total leasing for the year to almost 200K SF, according to the release. SL Green also took control of that building following distress from an affiliate of Chinese conglomerate HNA Group, which paid $2.2B for 245 Park in 2017 but later filed for bankruptcy.
SL Green sold a 49.9% equity stake in the building to Mori Trust this summer, valuing the tower at $2B, a price that was considered a victory amid declining overall commercial real estate values.
UPDATE, DEC. 4, 10:30 P.M. ET: This story was updated to include the identity of the buyer of 625 Madison.
