REIT Selling Clock Tower at 1 Madison and 292 Madison, Circling Citigroup's Tower at 333 W 34th St.
SL Green Realty Corp. (NYSE:
SLG) is keeping busy following its $6 billion buyout of Reckson Associates Realty Group late last year, which added five prime Manhattan assets to its portfolio. According to investment sales brokers, the New York City-based REIT is shopping two office properties on Madison Ave., the Clock Tower portion of the property at 1 Madison Ave. in Midtown South, and the building at 292 Madison Ave., while kicking the tires at another office building on the West Side -- Citigroup's tower at 333 W 34th St.
SL Green acquired the landmark Clock Tower property in 2005 through a joint venture with its subsidiary Gramercy Capital Corp. from MetLife Inc. The venture paid $918 million or $780 per square foot for the two contiguous buildings at 1 Madison, the 41-story North Tower (Clock Tower) and the South Tower.
The 1.2 million-square-foot property, which occupies the entire block fronting Madison Square Park from 23rd to 24th street, used to serve as MetLife's headquarters. Credit Suisse now anchors the building, leasing more than 1.1 million square feet on a lease that runs through June 2020, according to CoStar Group information.
Last year, SL Green announced a venture with Credit Suisse, RFR Holding LLC and high-end hotelier Ian Schrager to redevelop the Clock Tower into residential condominiums with a hotel component. The remake would have used the property's air rights, which would allow the development of an additional 470,000-square-foot tower over the south building.
As part of the arrangement, SL Green reportedly gave Credit Suisse a 50% ownership stake in whatever would be developed, since Credit Suisse would have to vacate its offices within the clock tower to allow it to be converted into residential condos.
Now, SL Green is looking to sell the Clock Tower portion and dissolve the partnership, said Gregory Hughes, the REIT's CFO, in a presentation at the Credit Suisse Real Estate Conference last week in New York. Darcy Stacom and Bill Shanahan of CB Richard Ellis are believed to have the listing, which at this point, consists of just the Clock Tower, said a source familiar with the offering.
SL Green is also selling the 187,000-square-foot building at 292 Madison and E 41st St. It tapped the Cushman & Wakefield team of Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan to sell the property. Bids are due on April 24th.
SL Green acquired the property from Reckson for $30 million in 1999 -- long before it bought out Reckson. It should bring a nice profit to the REIT. This time around, 292 Madison should trade in the $140 million range, according to a source familiar with the offering.
The building, which was developed in 1923, is 100% leased with rents averaging $65 per square foot, according to CoStar.
The property sales are part of SL Green's disposition goals for the year. The REIT plans to shed between $600 million and $1 billion in assets, Hughes said.
Meanwhile, SL Green has set its sights on the 309,747-square-foot building at 333 W 34th St. on the West Side, Hughes said. Citigroup Inc. is selling the property, which is known as the Smith Barney Building, through the same Cushman & Wakefield team.
SL Green is facing some stiff competition for the property, which is attracting such other big players as Vornado Realty Trust (NYSE:
VNO), according to sources familiar with the offering. The building has been through three rounds of bidding and a buyer is expected to be chosen this week, said the source.
The 10-story building sits between Eighth and Ninth avenues in the Penn Plaza/Garment submarket. It was developed in 1953. It is fully leased with Citigroup taking most of the space.