In one of the largest office building sales of the year, SL Green Realty Corp. (NYSE:SLG) is buying two lower Manhattan office buildings owned by Citigroup Inc. as the bank looks to free up capital and shed company-owned real estate.

Citi's Tribeca complex is comprised of a 40-story high-rise and an adjacent 10-story building at 388 and 390 Greenwich St., a block off the Hudson River waterfront.

New York-based SL Green confirmed it's paying more than $1.57 billion, or nearly $600 per square foot, in a pending deal, although it declined to name the property due to confidentiality agreements. In a statement, SL Green CEO Mark Holliday called the deal the largest property transaction since credit market turmoil began, and said it demonstrates the REIT's strong financial condition.

The city's largest office landlord also said it has already lined up a joint venture partner, Canadian real estate investor SITQ, which will take a minority stake in the property when the deal closes later this month.

The news that Citigroup was selling its pricey Manhattan real estate in a bid to raise money was not surprising. Citigroup, the nation’s largest bank, announced this week that it will record losses up to $11 billion for the current quarter. Since August, the bank’s market value has dropped nearly $50 billion, according to a report in The Wall Street Journal. Citigroup has been shedding office space and this deal marks the bank’s last owned office space in Manhattan.

Yet, the fact that SL Green ended up as the buyer is very surprising. A few weeks ago, several media outlets reported that San Francisco-based Shorenstein was considered the frontrunner to acquire the buildings from Citigroup. According to a source with knowledge of the negotiations, when Shorenstein asked to alter terms of its offering in light of Citigroup’s credit woes, the bank turned to SL Green, next in line in the bidding war and willing to underwrite the deal on pre-credit crunch terms.

Citi has reportedly agreed to lease back the complex under a triple-net deal that runs for a 13-year term. The property's primary tenant is Citi investment banking subsidiary Smith Barney, according to CoStar information.

Earlier this fall, Citi hired Cushman & Wakefield to begin shopping the property as a potential sale-leaseback, a Citi executive told Bloomberg in October.

The sale of the Tribeca complex would be consistent with several other Manhattan sale-leasebacks by Citi in the past two years. In June the bank sold 333 W. 34th St., a 350,000-square-foot building in midtown, to SL Green for $183 million. A year before that, it sold a neighboring Tribeca office at 250 West St. to Plaza Hotel owner Elad Group for $142 million.

Cushman & Wakefield Sonnenblick-Goldman arranged financing on the deal through Westdeutsche ImmobilienBank AG and PB Capital Corp.

Jillian Ambroz contributed to this report.