SL Green Realty Corp., a REIT focused on Manhattan office properties, has entered into a sale-purchase agreement to sell 49.5% interest in 485 Lexington Avenue to a joint venture partnership comprised of Herzliya, Israel-based Optibase Ltd. and Gilmore USA LLC. The JV, Mazal 485 LLC, will take ownership of nearly half of Green 485 JV LLC, the entity designated as owner of 485 Lexington (also known as Grand Central Square), in exchange for providing SL Green with approximately $20.8 million, as well as a loan of $20 million according to a Commercial Property Executive article.
The transaction results in an implied asset valuation of approximately $504.2 million, or $547 per square foot, and includes $450 million of existing debt, which will remain outstanding. The implied cap rate of this transaction is 6.25%. SL Green CEO Marc Holliday commented, "This is a first, but significant step towards the sale of interests in 485 Lexington Avenue. If ultimately approved, the transaction would demonstrate that the Midtown Manhattan office market continues to stand as one of the world's top locations and that investor interest is once again on the rise."
SL Green originally acquired the 921,000 square foot office tower in 2004, and immediately embarked upon a $90 million capital repositioning program which included window replacements, installing a new lobby, replacing retail storefronts, and upgrading corridors and elevators. The property is currently 96.8% occupied with tenants including Citigroup and The Traveler's Indemnity Corporation which, together, occupy half the space.
For more news and information, visit Blumberg Capital Partners.
Comments