SL Green Buys 11 Madison for $2.6B in Record Deal

In the largest single-building transaction in New York City history, SL Green Realty Corporation, New York City's largest office landlord, announced this week that it had completed the purchase of 11 Madison Avenue for $2.285 billion, plus approximately $300 million in costs associated with lease stipulated improvements to the property. The building was acquired from Sapir Organization and the minority partner CIM Group, which bought the property in 2003 for $675 million and managed to bring in marquee technology and media tenants.

The Sapir Organization, led by CEO Rotem Rosen and President Alex Sapir, tripled the net operating income of the building to $120 million from $40 million, according to sources. The deal is the biggest for a single building in Manhattan since the 2008 acquisition of the General Motors Building for $2.8 billion, and the second-largest in U.S. history, according to research firm Real Capital Analytics Inc.

SL Green Realty CFO Matthew DiLiberto told REIT.com that the company faced "deep competition both from domestic and international capital" for the property. He noted that the deal's 4.6 percent acquisition capitalization rate is particularly favorable. "Market cap rates for the highest quality assets in the city are going in the" range of 3 percent, according to DiLiberto. SL Green noted that 11 Madison Avenue has rents in place that are substantially below market, offering long-term growth opportunities.

The 29-story, 2.3 million-square-foot Manhattan office tower, formerly known as the Metropolitan Life North Building, was completed in three phases between 1932 and 1950. From 1994-1997, the building, which has served time as Met Life's records warehouse, had its interior redesigned by Haines Lundberg Waehler and the exterior renovated, all at the cost of $300 million.

For more news and information visit Blumberg Partners.