SL Green, Ivanhoe Cambridge to Sell 1745 Broadway Office Condo for $633 Million
Trio of Sales Could Net City's Largest Landlord $190M for Ongoing $1.5B Stock Repurchase
The Random House Tower at 1745 Broadway is on the block for approximately $633M as SL Green looks to "support the stock repurchase program and strengthen [its] portfolio," according to Co-Chief Investment Officer, Isaac Zion.
SL Green Realty Corp. (NYSE:SLG), New York City’s largest office landlord, along with joint-venture partner Ivanhoe Cambridge, has entered into a definitive sales agreement to sell its leasehold interest in the office condominium portion of the Random House Tower office building at 1745 Broadway in New York City.
An institutional client of Invesco Real Estate has been identified as the buyer in the contract. Subject to customary closing conditions, SL Green reports it expects the sale to close in the second quarter of 2018 for approximately $633 million, or about $939 per square foot.
In addition, SL Green has separately entered into contracts to sell two suburban office properties, located at 115-117 Stevens Ave. in Valhalla, NY and the Reckson Executive Park in Rye Brook, NY, to different buyers for a combined price of approximately $67 million. The seller expects the two deals to close in the second and third quarters of 2018, respectively, subject to customary closing conditions.
These transactions are expected to generate combined net proceeds to SL Green of approximately $190 million, according to a corporate release. SL Green stated it will use the proceeds for the company’s ongoing, $1.5 billion stock repurchase program. To date, the firm has repurchased almost 12.26 million outstanding shares.
The Random House Tower is a 26-story, 674,000-square-foot, 5-Star office building constructed in 2003 on one-third of an acre in the Columbus Circle submarket of Manhattan, at the southwest corner of 56th Street and three blocks from Central Park and Columbus Circle.
The asset is currently 100 percent leased, anchored by publisher Penguin Random House, Inc. Designed by Skidmore, Owings & Merrill, the building features state-of-the-art infrastructure, column-free floor plates, river views and LEED-EB certification.
David Schonbraun, co-chief investment officer with SL Green, commented, "After securing a long-term lease [and] extension with investment-grade tenant Random House, and stabilizing the asset, we determined that this was the right time to monetize our success with the property and redeploy that capital into more accretive investment opportunities, including our share repurchase program."
SL Green, Ivanhoe Cambridge and The Witkoff Group acquired the steel tower from Jamestown LP in December 2006 for $509 million, or about $755 per square foot, according to CoStar data. Witkoff later divested its interest in a year-end 2014 deal that consolidated management of the asset and saw SL Green's ownership stake increase from 32.3 percent to 56.9 percent in exchange for SL Green Operating Partnership units.
The owner of the leased fee interest at the tower is Sheila Engel and the Sheila Engel Living Trust in a 50/50 split, according to CoStar research.
115-117 Stevens includes two adjacent office buildings comprising a total of 178,000 square feet on five acres in the West I-287 Corridor submarket of Westchester County.
Reckson Executive Park, located at 1-6 International Dr., consists of six Class A office buildings totaling 540,000 square feet of commercial space built in the 1980s in the East I-287 Corridor submarket of Westchester County.
For the Record: SL Green, an S&P 500 company and fully-integrated REIT, holds interests in 121 buildings totaling 50 million square feet in Manhattan in addition to 25 suburban buildings totaling 3.7 million square feet in the Outer Boroughs and Connecticut, as of December 2017. The firm retained Eastdil Secured to market the 1745 Broadway sale, and CBRE to broker the suburban asset sales.