NEW YORK CITY-SL Green Realty Corp. and Gramercy Capital Corp. said Monday they’ve forged an agreement for the REIT to buy a trio of Gramercy investments for an aggregate price of $390.8 million. Largest of these is a 45% joint venture stake in the leased fee of the office tower at 885 Third Ave., better known as the Lipstick Building.
SL Green is acquiring that Lipstick Building stake for $39.3 million and assuming $120.4 million in mortgage debt. A JV of SL Green and Gramercy already owns a 79% fee interest and 21% leasehold interest in the property; the deal announced Monday would increase SL Green’s ownership of the JV to 100%, for an implied total value of $352 million. Last month, GlobeSt.com reported that the ownership of 885 Third, an entity of Israel-based Metropolitan Real Estate Investors, sought a prepackaged bankruptcy.
Similarly, SL Green is increasing its ownership of the leased fee of 2 Herald Square to 100% via a $25.6-million acquisition plus the assumption of $86.1 million in debt. Based on the purchase price, the implied total value is $247.5 million, according to a release. SL Green also is buying the entire leased fee interest in 292 Madison Ave. for approximately $19.2 million, plus assumed mortgage debt of $59.1 million.
The two companies also announced a $38.7-million mezzanine loan secured by equity interests in 601 W. 26th St., also known as the Starrett-Lehigh Building. This supplements an existing SL Green investment in the 2.2-million-square-foot behemoth.
In a release, SL Green president Andrew Mathias says the transactions conclude “an important consolidation in our ownership of land and improvements representing 1.2 million square feet of prime Midtown properties, all with long–term operating leases to third parties.” At Gramercy, CEO Roger Cozzi says the agreement will enable the company to “monetize several non-controlling co-investment positions, produce a substantial increase in our corporate liquidity and further deleverage Gramercy’s balance sheet.”
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