According to Andrew Mathias, SL Green's chief investment officer, the firm was attracted to the 292,000-sf office building located between Fifth Avenue and Avenue of the Americas because they had previously owned property on the same street and were aware of its potential. "It's a unique block," he tells GlobeSt.com. "With the university clubs and the Royalton, it's more like an avenue than a side street."

Marc Holliday, SL Green's president and CEO, notes that the privately negotiated transaction is another example of the company's ability to source acquisitions through its structured finance program. "This transaction evidences our commitment to pursue properties where we can enhance value over time with our management, leasing and redevelopment expertise."

The firm will assume existing indebtedness of $47.2 million provided by RBS Greenwich Capital and CT Mezzanine Partners. The balance of the purchase price will be funded with SL Green's unsecured line of credit. Currently, SL Green has a $7-million preferred equity investment in the property that will be redeemed at the closing.

The initial unleveraged cash NOI yield on investment is 8% based upon fully escalated in-place rents of $36.75 per sf. In addition, the NOI could be increased near-term because the property is only 86% leased. Space at the site is advertised in the mid to upper $30s per sf. Tenants include New York Sports Club, Investors Business Daily and Writers & Artists Agency.