NEW YORK CITY-A joint venture of SL Green Realty Corp. and Vornado Realty Trust will now hold a majority equity stake in 280 Park Ave. under a recapitalization jointly announced Tuesday afternoon by the two REIT titans, Broadway Partners and Investcorp. The equity and debt positions on the 1.2-million-square-foot office property have been combined into a new ownership structure; the partnership plans a $150-million repositioning and re-tenanting program, according to the joint announcement.

An SL Green spokesman declined to comment beyond the official release, in response to GlobeSt.com’s request for information on what valuation the recap places on the two-tower property between 48th and 49th streets. Broadway Partners and Investcorp paid just under $1.3 billion for 280 Park in November 2007, according to Real Capital Analytics, and SL Green and Vornado recently joint ventured on $400 million in mezzanine debt for the property.

“Many great office properties were impacted adversely by the most recent market downturn, but now offer great upside potential to investors who have the resources to take advantage,” Marc Holliday, SL Green’s CEO, says in a release. “We see 280 Park as one of those opportunities and we look forward to working with our partners to realize the property’s great potential.”

Holliday adds that his company, in its first-ever JV with fellow office REIT Vornado, was pleased to work with the Scott Lawlor-led Broadway Partners team “to resolve a series of complex issues and fashion a new ownership structure that should benefit everyone.” Holliday’s counterpart at Vornado, president and CEO Michael Fascitelli, says in the release that “We have great partners in this venture and believe that the recapitalization and redevelopment of this prime asset will produce strong returns for our shareholders.”

Similarly, Lawlor says that Vornado and SL Green “have outstanding records in repositioning properties, and we look forward to working together to maximize value.” Edgerock Realty Advisors served as Broadway Partners' advisor in the recap.

Under terms of the new ownership structure, Broadway Partners will put in fresh equity capital to retain an ownership interest, and will remain in a co-management role on 280 Park. Currently it has a large contiguous block of vacant space, on which the partnership is accentuating the positive by positioning it as a rare commodity in Midtown.

Earlier this year, Vornado took a 95% stake in another Park Avenue property acquired at the peak of the market, also with the continued participation of its former majority owner. Vornado in late March closed on its acquisition of a 95% interest in 1 Park Ave. in partnership with a real estate fund of which it’s 25% owner. The deal valued the 95% stake at $374 million of a total value of $393 million, or $422 per square foot, and included $137 million in cash as well as Vornado’s share of a new $250-million, five-year mortgage.

Murray Hill Properties retains a 5% stake and will continue managing and leasing the property. A JV of MHP and Cerberus Capital Management acquired the 933,315-square-foot office tower for $550 million in February ’07, RCA data show. Concurrently with the recap of the property, Vornado secured an expansion lease with tenant NYU Langone Medical Center that nearly doubled its space there to 367,584 square feet and increased the property’s occupancy rate from 80% to 97%.