SL Green Makes $73M Grand Central Play

"As individual properties, 331 Madison and 48 East 43rd are attractive commercial office assets on their own--located strategically in the immediate proximity of Grand Central Station, which is SL Green's stronghold," says SL Green chief investment officer Andrew Mathias.

The 14-story, 92,000-sf 331 Madison Ave., which was built in 1923, is 100% leased to a variety of tenants including law firms and real estate companies. Retailers Nine West Group and Shoe Mania are also located in the building. 48 E. 43rd St. is 22,850-sf, seven-story building on the corner of Madison Avenue and 43rd Street. The building, which was built in 1900, is 86% leased.

The properties are located adjacent to 317 Madison Ave., a property SL Green has held in its portfolio since 2001. 317 Madison Ave. is a 490,000-sf, 23-story building that was built in 1920, and is currently undergoing a complete renovation receiving new elevators, corridors, bathrooms and a new lobby. After purchasing the property, "The company will look closely at combining the property sites with 317 Madison Ave., for the purpose of taking advantage of an unparalleled opportunity to develop a world-class commercial office building in the heart of the Grand Central submarket," Mathias says.

The closing date for the transaction was not released, but Mathias says that after the deal is complete the properties will be accessed to determine if renovations are needed. "Upon acquisition, the company will consider implementing a strategic capital improvement and marketing plan to reposition the assets and attract smaller, high-end boutique tenants."

"The company will also look closely at combining the property sites with 317 Madison Ave., for the purpose of taking advantage of an unparalleled opportunity to develop a world-class commercial office building in the heart of the Grand Central submarket. Regardless of the route we decide to take, we are confident that we will be able to generate substantial value on behalf of our shareholders." Mathias says. The 43rd Street property could be converted into an extension of 317 Madison Ave. giving that building's current tenants room to expand.

These two acquisitions will add to SL Green's sizable Manhattan portfolio which includes 33 buildings totaling 24 million sf. Its portfolio grew significantly when the company acquired Reckson Associates Realty Corp., gaining six new Manhattan office buildings totaling 5.6 million sf.

But the company is not looking to hold all the properties. At an investor conference at the end of January, SL Green's CEO Marc Holliday said the company plans $750 million of dispositions.