Press Release Details
SL Green Announces Fifth Avenue Retail Transactions
New York, NY - July 25, 2012 - SL Green Realty Corp. (NYSE: SLG) and partner Jeff Sutton have announced the restructuring and recapitalization of their joint venture at 717 Fifth Avenue. In these transactions, SL Green has sold 50% of its interest to Sutton and retains a 10.92% stake in the venture's retail condominium property at a price that values the asset at $618 million, or $5,015 per square foot. This valuation reflects a 4.9% capitalization rate on in-place net operating income.
In addition, the venture has received $590 million of new financing in the form of a $300 million fixed-rate mortgage loan and a $290 million mezzanine loan. The mortgage loan, originated by New York Life and TIAA, has a 10-year term and the mezzanine loan, originated by RREEF, has a 12-year term.
SL Green received $85 million in net cash proceeds from the transactions.
SL Green acquired its interest in the property in 2006 at a price which valued the property at $230 million. During six years of ownership, net operating income was increased by approximately 2.5 times via the execution of new retail leases with Armani and Dolce & Gabbana and the relocation of Escada to new space on 55th Street.
SL Green President, Andrew Mathias, commented, "Our joint venture investment with Jeff Sutton at 717 Fifth Avenue has been a resounding success, as evidenced by the realization of net operating income through creative repositioning and leasing over the past six years. The result is a sizable gain in asset value, as recognized by our lenders, as well as our ability to monetize a portion of our position and generate substantial cash proceeds."
Located in the heart of Manhattan's Plaza District, 717 Fifth Avenue is well positioned along New York City's most desirable stretch of luxury retail properties. The retail condominium totals 123,000 square feet on four floors, with 81.5 feet of sidewalk frontage on Fifth Avenue. The long-term leases with Dolce & Gabanna and Escada were executed in 2011.
About SL Green:
SL Green Realty Corp., New York City's largest office landlord, is the only fully integrated real estate investment trust, or REIT, that is focused primarily on acquiring, managing and maximizing value of Manhattan commercial properties. As of March 31, 2012, SL Green owned interests in 70 Manhattan properties totaling more than 39.0 million square feet. This included ownership interests in 27.3 million square feet of commercial properties and debt and preferred equity investments secured by 11.7 million square feet of properties. In addition to its Manhattan investments, SL Green holds ownership interests in 32 suburban assets totaling 6.9 million square feet in Brooklyn, Queens, Long Island, Westchester County, Connecticut and New Jersey, along with four development properties in the suburbs encompassing approximately 0.5 million square feet.
Forward Looking Statements
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Director, Investor Relations