The buildings will be occupied by a financial services tenant under the terms of a 13-year triple-net lease that provides for annual rental increases. The initial rental payments will provide a 6.3% un-leveraged return on the purchase price. Due to confidentiality provisions in the purchase agreement, SL Green was unable to provide further details of the acquisition at this time.
The transaction, which is subject to customary closing conditions, is expected to close this month. Mortgage financing will be provided by Westdeutsche ImmobilienBank AG and PB Capital Corp. Cushman & Wakefield Sonnenblick-Goldman LLC exclusively arranged the financing.
"As the largest property transaction since the current credit market difficulties began, it demonstrates our company's overall reputation as a preferred landlord, our strong financial condition, and our ability to take advantage of compelling investment opportunities as they arise," notes SL Green CEO Marc Holliday in a prepared statement. "We continue to enjoy a successful working relationship with SITQ, with whom we have previously co-invested on several occasions."
Paul Campbell, president and CEO of SITQ, says in the statement that the company sees this as a "terrific way to invest in some of Downtown Manhattan's truly iconic properties. To do so alongside SL Green…made it all the more attractive to us. As New York City market conditions continue to evolve, we will look for additional opportunities."
As of Sept. 30, SL Green owned 31 New York City office properties totaling approximately 22.4 million sf. SITQ owns real estate assets consisting of 114 properties representing more than 35 million sf of leasable space.
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