RXR Realty Sells 49% of 61 Broadway, Secures $290M Loan

Uniondale, New York-based RXR Realty announced that it has sold a 49% interest in the $440 million office building at 61 Broadway in New York's Financial District, and has closed on a $290 million mortgage on the firm's interest in the 33-story office property. RXR Realty sold the 49% stake to an affiliate of China Orient Asset Management for $216 million and secured the mortgage from the Bank of China and SL Green Realty. RXR paid $330 million for the 790,000-square-foot building in May 2014 and put it back on the market in September 2015 hoping to sell for $450 million. Prior to RXR Realty's acquisition, Broad Street bought 61 Broadway for $130 million in 2004. Full terms of this month's deal were not disclosed.

"We are thrilled to have China Orient join us as our new partner and are pleased that we were able to create meaningful value by upgrading 61 Broadway and executing more than 100,000 square feet of leases at extremely attractive rents," said RXR Realty Chairman and CEO Scott Rechler in a prepared statement. "We look forward to executing the next level of value creation as we recapture space and release it at higher rents to the dynamic 21st century tenants that 61 Broadway is now attracting."

61 Broadway, also known as the Adams Express Building, was designed by Francis Kimball with an estimated construction cost in 1912 of $2 million. The office building between Rector and Morris Streets was 90% leased at the time of sale, with major tenants including architectural firm Bjarke Ingels Group, securities firm Samuel A. Ramirez & Co., innovation think tank Human Condition Global, and data governance company Collibra Inc. The palazzo-style building offers tenants a renovated lobby, high ceilings and great views, as well as quick access to several transit lines connecting to the talented and growing workforce living in Brooklyn, the rest of Manhattan, Northern New Jersey and the rest of the region.

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Citigroup Buying Back HQ from SL Green for $2B

In its fourth quarter investor calls, SL Green Realty Corp. disclosed that Citigroup, Inc. has exercised their option to purchase 388-390 Greenwich Street for $2.0 billion. The closing is scheduled for December 2017. On Thursday, SL Green executives on a quarterly conference call with analysts said the deal would be profitable for the company. "It allows us to close out a very profitable position, investment position, we took in the asset," said Marc Holliday, SL Green's chief executive. He also noted the transaction "will result in a reduction of indebtedness."

Citigroup previously sold the two-building, 2.6 million-square-foot Tribeca complex to SL Green and Ivanhoe Cambridge, a unit of the Société immobilière Trans-Québec (SITQ), for $ 1.58 billion in 2007. Citigroup continued to lease space after the sale through a 15-year leaseback arrangement, and occupies the complex as the headquarters for Citigroup's divisions of Global Wealth Management and Global Trading. 388 Greenwich Street, originally called the Shearson Lehman Plaza, and more recently the Travelers Building, is a 496-foot, 38-story postmodern office building completed in 1988 and designed by Kohn Pedersen Fox. 90 Greenwich Street comprises 10 story building covering a total area of over 2.6 million square feet.

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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.

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SL Green Supertower Gets City Approval with Grand Central Improvements

The New York City Council approved a change to zoning law that will allow for the construction of SL Green Realty's One Vanderbilt skyscraper, with an unusual tradeoff: SL Green's added commitment to make upgrades to Grand Central Terminal that will allow for more rush-hour trains on the subway's busiest lines. The approach has been viewed by some proponents as a model for how the Metropolitan Transportation Authority can pay for some projects as it grapples with a $14 billion shortfall in the agency's $32 billion proposed capital plan, according to a New York Times report.

The council members unanimously approved the zoning change to allow the 65-story tower to rise alongside the historic landmark, with SL Green investing about $220 million in critical improvements to Grand Central, including building new subway entrances, a pedestrian plaza at street level, and a public hall in the building's lobby. "This is the first time we've seen vast private investment to improve mass-transit access," said Mitchell Moss, a professor of urban planning at New York University.

"This is the bottleneck to the subway line," Edith Hsu-Chen, director of the Manhattan office of the city's department of planning, told city council members during a hearing last month. "Improvements made to this station would affect the entire line and commuters in the whole city." SL Green will strip the columns down to the bare bones — slimming them down by about a foot each — and narrow the stairwell to create about two and a half feet of extra space on the platform. "At rush hour, people congregate around these columns. People can't get off the train," said Robert Schiffer, managing director at SL Green. "The idea is to diffuse people."

One Vanderbilt, bounded by Vanderbilt Avenue and Madison Avenue between East 42nd and East 43rd Streets, will be 1,501 feet tall and contain 1.6 million square feet of Class A commercial space. Designed by Kohn Pedersen Fox (KPF), One Vanderbilt's architecture and building materials pay homage to the landmarked Terminal and the surrounding East Midtown business district. Building features include open floor plans, efficient use of space, and the highest level of sustainable design in New York City. TD Bank has already signed to anchor approximately 200,000 square feet of space in One Vanderbilt, including a flagship retail store on the northeast corner of 42nd Street and Madison Avenue. One Vanderbilt is projected to create 5,200 construction jobs and 190 permanent union jobs.

For more news and information visit Blumberg Partners.

SL Green Sells 3 Manhattan Properties

SL Green Realty Corp., New York City's largest office landlord, announced this week that it had agreed to sell three of its Manhattan assets in separate deals that will generate net cash proceeds of $240 million. In the first deal, SL Green is selling ts leased fee interest in 2 Herald Square, an 11-story 365,000 square foot commercial office building, for $365 million. In the second, SL Green, with its partner Jeff Sutton, reached an agreement to sell all of their interests in a mixed-use asset at 180 Broadway for $222.5 million. Finally, SL Green also closed on the sale of its development properties at 985–987 Third Avenue for $68.7 million.

"While the strategic approach for each of these investments varied, we had one goal in mind: creating shareholder value. I am very pleased to say that with each of these transactions, we've successfully demonstrated our ability to identify, create, and harvest significant value. Our combined IRR across these three deals is in excess of 21%," said Andrew Mathias, President of SL Green, in a company statement.

In its announcement, SL Green Realty did not identify the prospective buyers in any of the transactions.

For more news and information visit Blumberg Capital Partners.

NorthStar Invests $340M in RXR Realty

NorthStar Realty Finance, a diversified commercial real estate investment and asset management company that is organized as a REIT, has closed a strategic $340 million investment in New York's RXR Realty. According to a NorthStar press release, the investment includes a combination of corporate debt, preferred equity and common stock in RXR which provides NorthStar with an approximately 30% ownership interest in RXR. NorthStar Asset Management will be entitled to 50% of the asset management fees from any capital raised through its distribution network and will be entitled to additional asset management fees through its proportionate ownership interest in RXR.

NorthStar's Chairman and Chief Executive Officer, David Hamamoto, commented, "We are very pleased to partner with such a high caliber, successful and well-known organization like RXR. Given RXR management's track record in both the public and private markets, its high quality real estate portfolio and its growing asset management business, they are a perfect fit for NorthStar, both in terms of further diversifying NorthStar's asset base with trophy properties in New York City, and growing NorthStar's asset management business."

RXR's Chairman and Chief Executive Officer, Scott Rechler, commented, "We are extremely excited to partner with the dynamic and high quality team at NorthStar. We believe that NorthStar's strong balance sheet, deal flow and capital raising capabilities will enable us to more effectively execute our investment strategy in the New York Metropolitan area. NorthStar is the ideal strategic partner for RXR to continue executing on our expansion plans and, in turn, we believe our growth will substantially boost NorthStar's rapidly growing asset management business."

RXR was formed in 2007 by the former management team of Reckson Associates Realty Corp. after it sold Reckson to SL Green Realty in January 2007 for $6.5 billion, according to a CoStar report.

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REITs See Increasing Demand for Office Leasing Deals

In a new article from CoStar Group, notes from recent earnings conference calls reveal that REIT landlords have made special note that they see demand for 2014 office leasing deals increasing. CoStar Group reported that the overall U.S. office vacancy rate continued to decline, dipping from 12.7% at mid-year 2012 to 12.1% as of June 30, 2013, and projected to move steadily toward a 10.5% - 11% vacancy range by 2016. Some quotes on the state of the markets from industry leaders follow:

"I think [recovery] is probably a little early for the suburbs," said Marc Holliday, CEO of SL Green Realty Corp. "The financing markets are still not terribly liquid and the sale markets -- there's not a lot of transaction activity. So we're still in a hunker-down mode out there, trying to block and tackle and do as much leasing as we can in some very challenging markets."

"We continue to see demand for new properties in strategic location," said Steve Budorick, executive vice president and COO of Corporate Office Properties Trust. "Our development leasing goal for 2013 was 400,000 square feet. We did 100,000 square feet in the first quarter and over 460,000 square feet in the second quarter alone, putting total development leasing for the year well over a half of million square feet."

"Most office construction that is occurring is build-to-suit, but that varies by market. The strongest markets, such as San Francisco, San Jose and Houston, are seeing speculative construction due to a lack of suitable space available in the market," said Andrea Cross, national office research manager for Colliers International. "We also are seeing tenants in industries in which the competition for talent is fierce, notably tech and energy, building high-quality office space with amenities to attract and retain workers."

"You're seeing a greater number of smaller type deals at $100 a square foot being done than at any time in the past. You're seeing an improving national economy and a very strong local economy," said Steven M. Durels, executive vice president and director of leasing of SL Green Realty. "So I think the fundamentals are there and it's at a point in time that job growth continues to get us to a point of supporting the demand that we'll enjoy that spike in rents."

For more news and information visit Blumberg Capital Partners.

Long Island City's One Court Square Trades for $481M

SL Green Realty Corp. announced this week that One Court Square in Long Island City, NY was sold for approximately $481 million. SL Green took control of the property in a joint venture with JPMorgan when it acquired the real estate investment trust Reckson in 2006. The transaction included the assumption by the purchaser, an unnamed private investor group, of $315 million of existing debt.

The tower was marketed by brokers Douglas Harmon and Adam Spies of Eastdil Secured. The price works out to a hair more than $350 a foot for the 1.4-million-square foot building that is triple-net leased back to Citibank through 2020, but will need a new mortgage in 2015, according to a New York Post article. CoStar Group reports that the 52-story, 1.49 million-square-foot, Class A marquee office building was designed by Skidmore Owings & Merrill and built in 1985 on 1.9 acres, towering above the Northwest Queens County submarket of Long Island.

For more news and information visit Blumberg Capital Partners.

$$230M Loan Secured for 100 Church Street

Cushman & Wakefield Equity, Debt and Structured Finance announced this week that it had arranged a $230 million senior mortgage loan for 100 Church Street in New York, New York on behalf of SL Green Realty Corp. The ten year fixed rate financing, provided by Wells Fargo and bearing interest at a rate of 4.675%, will be used for general corporate purposes according to a Commercial Property Executive article.

"The leasing market remains pretty strong (in Manhattan), and I think the pace is consistent with historical averages," David Schonbraun, co-chief investment officer at SL Green, told Commercial Property Executive.

SL Green also announced that the City of New York renewed its lease covering 372,520 square feet for offices of the law division at 100 Church Street, the 21-story, 1.05 million square foot building located in downtown Manhattan. "We are delighted to have the City of New York as our anchor tenant. The City's decision to extend its commitment is testament to the quality of our recently completed redevelopment of 100 Church Street," said Steven Durels, Executive Vice President and Director of Leasing and Real Property for SL Green. Mr. Durels continued, "This early renewal is consistent with our firm's proactive management of future lease expirations which has led to consistently high portfolio occupancy."

For more news and information visit Blumberg Capital Partners.

SL Green to Acquire 304 Park Ave South for $135M

In a deal expected to close on June 1, SL Green Realty Corp. announced this week that it had entered into an agreement to acquire 304 Park Avenue South for $135 million from a partnership headed by David Berley, Chairman of Walter & Samuels Inc. The purchase price of the 215,000 square foot mixed-use office and retail building equals roughly $628 per square foot. Walter & Samuels represented the seller in the transaction, with Eastdil Secured serving as advisor.

304 Park Avenue South is located on the southwest corner of Park Avenue South and 23rd Street directly across the street from SL Green's One Madison Avenue in the Midtown South sub-district. The property is currently 95% leased to major tenants including IMG Models, H&R Block, Bath & Body Works and Time Warner Entertainment.

Andrew Mathias, President of SL Green, commented, "We've been monitoring Midtown South carefully looking for acquisition opportunities, however the consistently tightening vacancy rates and substantial lease activity in the area have driven cap rates on marketed deals below our target investment thresholds. This unique opportunity came to us because of the attractiveness of our Operating Partnership Units and our relationship with the seller."

For more news and information visit Blumberg Capital Partners.

SL Green Venture Picks Up $416M Portfolio

In a venture formed with Stonehenge Partners, SL Green Realty Corp. announced this week that it had acquired eight retail and multifamily properties in New York City for $416 million. According to a Businessweek article, the purchase marks SL Green's first foray into New York's apartment market and raises the real estate investment trust's profile as an owner of Manhattan street-retail properties. Even with this purchase, apartments are likely to remain “tangential to their business,” said Alex Goldfarb, an analyst with Sandler O'Neill & Partners LP in New York.

The venture indicated that a key component of the transaction is 724 Fifth Avenue, a prestigious retail location located between 56th and 57th streets in Manhattan's Plaza District, where Prada currently occupies approximately 20,700 square feet of space. The property enjoys prime position along the "Gold Coast" of Fifth Avenue -- a retail corridor known to achieve some of the highest retail rents in the world. It is situated in the vicinity of other retail properties which SL Green has ownership of, including 717 Fifth Avenue, home to Giorgio Armani's flagship store and the future flagship store of Dolce & Gabanna, in addition to 720 Fifth Avenue.

Andrew Mathias, President of SL Green, commented "This is an exciting opportunistic investment for SL Green, which already has an outstanding track record in acquiring and repositioning New York City office and retail properties. We also are excited about making our first significant equity investment in the multifamily area, which helps to diversify our portfolio further while still maintaining our New York City focus."

For more news and information visit Blumberg Capital Partners.

Deka Immobilien Investment Picks Up Manhattan Tower for $123M

Germany's Deka Immobilien Investment GmbH has acquired 19 West 44th Street in Midtown Manhattan for $123.2 million from SL Green Realty. The 292,000 square-foot Class B office building on "Club Row" was previously purchased by SL Green in 2004 for $67 million. Since that purchase, SL Green made building improvements, including lobby and window upgrades and HVAC improvements; the new purchase price reflects a $422 per square foot value.

Commenting in an article about the sale and on current market conditions, Michael Knott, an analyst at real-estate research firm Green Street Advisors told the Wall Street Journal that "office leasing conditions are rolling along the bottom, not bouncing off of the bottom. This cycle is likely to see a very slow improvement … until companies become confident enough to start signing more paychecks."

For more news and information visit Blumberg Capital Partners.