By Samantha Goldberg, Associate Editor
Nearly a decade after selling its Downtown Manhattan headquarters, Citigroup is coming full circle. The financial services giant plans to buy back 388-390 Greenwich St. from New York City’s largest office landlord, SL Green, in a $2 billion deal, as part of a previous agreement with the landlord. The company announced the purchase, which it expects to complete in December 2017, on Wednesday Jan. 27, in its fourth-quarter earnings statement. Fried Frank will be the legal advisor to Citigroup in the transaction.
The transaction seems to be a money-saving move, according to the Wall Street Journal, as the company is looking to consolidate in Downtown Manhattan.
The 2.6 million-square-foot property is triple-net leased to an affiliate of Citigroup through 2035, as part of a $1 billion deal in December 2013 that allowed Citi to extend its lease by at least 15 years at the two properties when it expires in 2020. Citi also agreed to move its global headquarters from 399 Park Ave., where it had been based for decades, to the Downtown Manhattan location. The agreement included the option for Citi to acquire 388-390 Greenwich Street from Dec. 1, 2017 through Dec. 31, 2020, which the company has now exercised. The 2013 deal was a major win for SL Green as well, as 388-390 Greenwich Street was the largest single property that the company owned at that time. Fried Frank also represented Citi in the 2013 transaction.
As part of its move to Greenwich Street, Citi has plans for major renovations to the buildings, including integrating the two buildings into one with a curtain-walled makeover and a single lobby “town square,” a rooftop terrace, new cafeteria and a fitness center, according to a March 2015 report from the Tribeca Citizen based on a Citi employee memo. These renovations seem to be underway as Fried Frank announced that they will also represent Citigroup on “land use matters related to a major renovation of the buildings being undertaken by the bank.” The Citi memo also stated that renovations are expected to be complete in 2019 and the building will be LEED certified.
The property was originally acquired in late 2007 by SL Green and an affiliate of Ivanhoe Cambridge. In March 2014, SL Green became the property landlord when it boosted its 51 percent stake in the property and bought Ivanhoe’s 49 percent stake. The office tower was valued at $1.6 billion at the time of the deal.