NEW YORK CITY-Gramercy Capital Corp., locally based commercial real estate specialty finance company, sells its 45% equity interest in the joint venture that owns One Madison Ave. to SL Green Realty Corp., a locally based REIT, for approximately $147.6 million. After closing, SL Green will own 100% of the property. The sale will produce approximately $92 million for Gramercy.

SL Green and Gramercy together formed a joint venture in May 2005 to acquire the 1.2-million-sf, 14-story office building, was originally constructed by MetLife as its headquarters. The building is 96% leased to Credit Suisse through 2020.

One Madison Ave. is adjacent to Five Madison Ave., better known as the Clock Tower, which was recently sold to Africa Israel by an SL Green joint venture. The two buildings are situated on approximately 1.93 acres overlooking Madison Square Park, occupying an entire city block between Madison Avenue and Park Avenue South between 23rd and 24th streets.

“The transaction will generate a significant amount of liquidity that can be recycled into Gramercy’s lending, net lease investing and real estate securities investment platform,” Bob Foley, CFO of Gramercy Capital, tells “For example, Gramercy Capitals continues to actively seek new net-lease investments in infill locations to drive residual value and the company’s net asset value.”

Foley further explains that this is a highly efficient way for the company to raise equity on a non-dilutive basis, without issuing new shares of common stock or incurring transaction costs that are associated with add-on equity offerings. “This will monetize the substantial capital appreciation in the property since Gramercy Capital acquired it in a joint venture with SL Green slightly more than two years ago.”

Issac Zion, managing director of SL Green, comments, “SL Green’s acquisition will provide it with 100% economic ownership of One Madison, which will promote the company’s ability to enhance the property’s value and create additional value for our shareholders.

“This sale is consistent with Gramercy’s long-stated strategy of steadily harvesting gains in its net lease portfolio,” Foley says. “We did something similar in 2006 on an office property in Northern New Jersey.”

Gramercy also closes an amendment and restatement of its existing unsecured credit facility arranged by KeyBanc Capital Markets, which increases the facility to $175 million from $100 million, reduces the interest rate to Libor plus 1.65% from Libor plus 2.10% and extends the maturity date to June 28, 2010. Current amounts outstanding under the facility are approximately $90 million, which company expects to retire later in July with a portion of the cash proceeds from the sale of the company’s 45% interest in its One Madison Ave. joint venture, according to a statement.

Simultaneously, SL Green closes on an increase to and modification of its existing unsecured revolving line of credit with Wachovia Capital Markets LLC and KeyBanc Capital Markets. The modifications, according to a release, increase the facility to $1.25 billion from $800 million, reduce the interest rate and extend the maturity fate to June 28, 2011.

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