Innovative Structure Allows SL Green to Realize High Current Returns
With Upside Participation
NEW YORK, May 13 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG) ("SL
Green") announced today that it has acquired a $20.0 million preferred equity
interest in a venture holding the loan secured by fee title of 1370 Avenue of
the Americas, a prime New York office tower located at 56th Street and Avenue
of the Americas in midtown Manhattan. The venture is entitled to receive all
of the cash flows from the building, in addition to full control over the
management and leasing of the property. It also has the right to obtain fee
title to the property after a prescribed period of time. SL Green has also
been reappointed manager of the property.
The investment entitles SL Green to receive a yield in excess of 12%, paid
preferentially on a current basis. In addition to receiving its preferred
return, SL Green will participate in the value it creates through a purchase
option, entitling it to acquire 50% of the common equity of the venture at a
fixed price, based on today's estimate of market value of the property.
Further, SL Green may obtain 100% of the venture through exercise of a right
of first offer.
The property is currently 92% leased and is currently undergoing a
$6.0 million capital improvement and leasing program. The company intends to
capitalize on below-market tenant lease expirations within the next three
years in order to maximize value. SL Green's $20.0 million investment, when
combined with the existing senior financing, equates to a $65.0 million, or
$216 per square foot, valuation before the residual equity.
Stephen L. Green, Chief Executive Officer and Chairman, added, "This
transaction produces significant and immediate cash returns, in addition to
creating a future pipeline opportunity. This building provides a balance
between current cash flow and upside potential. SL Green will have the
opportunity to add value through its hands-on management and leasing strategy,
and be able to realize on the value created through the purchase option."
Commenting on the transaction, Marc Holliday, Chief Investment Officer for
SL Green who negotiated the transaction on behalf of the Company, noted, "This
transaction, which is part of our high-yield program, demonstrates our
innovative approach to creating shareholder value in a non-traditional
structure. The preferred equity investment permits SL Green to control
strategic assets in our market and benefit from value creation in situations
where immediate equity ownership would not provide current returns consistent
with our yield targets."
SL Green Corp. is a fully integrated, self-administered and self-managed
real estate investment trust ("REIT") which primarily owns, manages, leases,
acquires and repositions Class B office properties in Manhattan.
This press release contains forward-looking information based upon the
Company's current best judgment and expectations. Actual results could vary
from those presented herein. The risks and uncertainties associated with the
forward-looking information include the strength of the commercial office real
estate market, competitive market conditions, general economic growth,
interest rates and capital market conditions. For further information, please
refer to the Company's filings with the Securities and Exchange Commission.
SOURCE SL Green Realty Corp.
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Related links:
http://www.slgreen.com
CONTACT:
Stephen Green, Chairman & CEO, or David
Nettina, President & COO, of SL Green Realty Corp., 212-594-2700;
or General Info, Paula Schwartz, Analyst Info, Pamela King, or
Media Info, Judith Sylk-Siegel, of The Financial Relations Board,
212-661-8030
NOTE TO EDITORS: To receive SLG's latest news release and other
corporate documents via FAX -- no cost-Dial 1-800-PRO-INFO. Use
company's symbol, SLG. Or visit SL Green's web site at
http://www.slgreen.com
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