{"id":1004119716,"date":"2015-05-20T06:36:02","date_gmt":"2015-05-20T14:36:02","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004119716"},"modified":"2022-12-08T21:36:46","modified_gmt":"2022-12-09T05:36:46","slug":"sl-green-to-drop-big-bucks-for-nyc-trophy-building","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/sl-green-to-drop-big-bucks-for-nyc-trophy-building\/","title":{"rendered":"SL Green to Drop Big Bucks for NYC Trophy Building"},"content":{"rendered":"<p><i>By Gail Kalinoski, Contributing Editor<a href=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/05\/11-Madison-Ave..jpg\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004119719\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/sl-green-to-drop-big-bucks-for-nyc-trophy-building\/11-madison-ave\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/05\/11-Madison-Ave..jpg\" data-orig-size=\"391,600\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;}\" data-image-title=\"11 Madison Ave.\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/05\/11-Madison-Ave..jpg?w=391\" class=\"alignright size-medium wp-image-1004119719\" alt=\"11 Madison Ave.\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2015\/05\/11-Madison-Ave..jpg\" width=\"195\" height=\"300\" \/><\/a><\/i><\/p>\n<p>SL Green Realty Corp. plans to acquire Eleven Madison Avenue, a 29-story, 2.3 million-square-foot Class A building in Manhattan\u2019s Midtown South market, for $2.3 billion in what is expected to be another record-setting deal for a New York City office tower.<\/p>\n<p>The definitive agreement announced Monday calls for SL Green, already the city\u2019s largest office landlord, to pay $2.3 billion plus approximately $300 million in lease-stipulated improvement costs to the owners, a joint venture of The Sapir Organization and CIM Group. The deal is expected to close in the third quarter.<\/p>\n<p>It would also be the second biggest deal for a U.S. office building since 2008, when Boston Properties bought the GM building at 767 Fifth Ave. for $2.8 billion from Harry Macklowe.<\/p>\n<p>Coming about five months after the previous record deal of $2.2 billion that Ivanho\u00e9 Cambridge and Callahan Capital Properties paid for the 1.2 million-square-foot <a href=\"https:\/\/www.commercialsearch.com\/news\/regions\/northeast\/ivanhoe-cambridge-makes-second-largest-single-office-building-transaction-in-u-s\/1004111420.html\">Three Bryant Park<\/a> office tower, it\u2019s another sign that Manhattan\u2019s commercial real estate market is on fire. In February, Norges Bank Investment Management acquired a 45 percent interest in <a href=\"https:\/\/www.commercialsearch.com\/news\/business-specialties\/investment\/norges-grabs-minority-stake-in-nycs-monumental-tower\/1004113355.html\">11 Times Square<\/a>, a 1.1 million-square-foot office and retail tower in Midtown that was valued at $1.4 billion. Earlier this month, RXR Realty paid $1.2 billion for <a href=\"https:\/\/www.commercialsearch.com\/news\/regions\/northeast\/rxr-shells-out-big-for-helmsley-building\/1004118931.html\">230 Park Ave<\/a>., a 1.4 million-square-foot office building that had been owned by a joint venture of Invesco and Monday Properties.<\/p>\n<p>\u201cIt\u2019s a large price tag but is highly complementary to their strategy of beefing up Midtown South exposures,\u201d Mitch Germain, a managing director and analyst who covers SL Green for JMP Securities, told <i>Commercial Property Executive.<\/i> \u201cMidtown South is one of the tightest office markets in the country and demand from tech\/media tenants is not likely to change any time soon.\u201d<\/p>\n<p>The Sapir Organization has owned the Art Deco building across from Madison Square Park since 2003, when it paid $675 million for the property built in 1929. Los Angeles-based CIM Group bought a 49 percent stake in 2010 for a reported $469 million.<\/p>\n<p>\u201cAfter the past two years of repositioning the asset and value creation through leadership and renovations, we are pleased to consummate this sale with SL Green,\u201d Alex Sapir, president of the Sapir Organization, said in a joint release. \u201cWe trust that they will continue to own and operate this trophy asset in the same manner that we have over the past 12 years.\u201d<\/p>\n<p>The building was originally the headquarters of Metropolitan Life Insurance Co. After a $700 million modernization in the 1990s, it became the North American headquarters of Credit Suisse, which is still the building\u2019s largest tenant. Sony, which sold its own headquarters at 550 Madison Ave. for $1.1 billion in 2013, plans to lease about 500,000 square feet at Eleven Madison Avenue for its new U.S. headquarters.\u00a0 Other tenants are Yelp, Young &amp; Rubicam, William Morris Endeavor Entertainment, Fidelity Investments and the Eleven Madison Park restaurant, which has earned Three Stars from the Michelin Guide.<\/p>\n<p>\u201cEleven Madison Avenue is one of the best assets in New York City\u2019s vibrant Midtown South submarket, with floor-plate sizes, amenities and a robust infrastructure that are truly unique to the area,\u201d SL Green Co-Chief Investment Officer Investment Officer Isaac Zion\u00a0said in the release. \u201cOccupying a full block across from Madison Square Park, the building has direct connectivity to One Madison Avenue, a 1.2 million-square-foot building that is leased to Credit Suisse and also owned by SL Green.\u201d<\/p>\n<p>Germain said the air rights at One Madison Avenue, \u201ccould offer an appealing redevelopment opportunity down the line. Given that some of the leases are locked in long term, the air rights don\u2019t seem to fit in the equation in the near term.\u201d<\/p>\n<p>SL Green currently holds interests in 117 Manhattan buildings totaling 43.6 million square feet as well as ownership interests in 37 suburban properties totaling an additional 5.9 million square feet. The REIT is close to securing final approvals from New York City for construction of a 63-story, 1.6 million-square-foot office tower at <a href=\"https:\/\/www.commercialsearch.com\/news\/regions\/northeast\/sl-greens-tower-moves-forward-in-unprecedented-deal-with-nyc\/1004118949.html\">One Vanderbilt Ave.<\/a> across from Grand Central Terminal. SL Green has agreed to make $220 million in transit improvements as part of a deal with city officials to move the project forward. It is expected to be completed by 2020.<\/p>\n<p>Asked whether SL Green\u2019s active acquisition and development schedule could overtax the REIT, Germain said he had high regards for the team and felt the balance sheet had sufficient capacity to handle the latest deal.<\/p>\n<p>\u201cWe expect SLG will leverage its joint venture relationships and take on a partner in Eleven Madison and possibly couple that with the other asset (One Madison Ave.) in order to alleviate funding needs,\u201d Germain told <i>CPE<\/i>. \u201cThis will also bring in asset management fees to increase return potential of the investment.\u201d<\/p>\n<p>The law firm of Greenberg Traurig, L.L.P. represented SL Green in the transaction. The seller was represented by Darcy Stacom and Bill Shanahan of CBRE, Inc., and the law firm of DLA Piper (U.S.).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>SL Green Realty Corp. is making a record-setting deal for a New York City office tower.<\/p>\n","protected":false},"author":1068,"featured_media":1004119719,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21783,11,21742,10,21747],"tags":[],"class_list":["post-1004119716","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-investment","category-midatlantic","category-latest","category-northeast","category-office"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SL Green to Drop Big Bucks for NYC Trophy Building - 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Gail has been a freelance writer and editor for more than 20 years, contributing to daily websites, magazines, weekly business newspapers, market intelligence newsletters, research reports, monthly B-to-B and consumer magazines. Earlier in her career, Gail worked for Gannett Corp. as an editor and reporter for 15 years. 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