Accretive Transaction Solidifies SL Green's Position as Major Landlord
In The Pennsylvania Station Submarket
Company's Wholly-Owned Portfolio Will Total 8.7 Million Square Feet
Of Prime New York City Office Space
New York, July 14 /PRNewswire/ -- SL Green Realty Corp. (NYSE: SLG)
("SL Green") announced today that it has contracted with 3832 Associates to
purchase the fee interest in 1250 Broadway, a 670,000 square foot, 39-story
office tower located in the Pennsylvania Station ("Penn Station") submarket,
for $93.0 million in cash ($139 per square foot).
Closing is expected to occur in the third quarter of 1999 and will
increase SL Green's ownership of office buildings in Manhattan to 24
properties with approximately 8.7 million rentable square feet. The
acquisition also makes SL Green one of the largest landlords in the resurgent
Penn Station area, with over 2.1 million rentable square feet.
The transaction is expected to be immediately accretive to funds from
operations ("FFO"). Management expects the property to generate going-in cash
returns of approximately 8.8%, and 9.6% on a GAAP basis. The levered internal
rate of return on the investment is expected to be in excess of 23%.
About the Property
1250 Broadway, which is currently 96.5% occupied, is located just one
block east of Penn Station between 31st and 32nd Streets on Broadway. The
Penn Station area is currently a hotbed of redevelopment in Manhattan with
renovations planned for both the terminal and surrounding areas.
A $500 million Penn Station redevelopment project is scheduled to begin in
2000 and to be completed by 2003. Upon completion, the 1.4 million square
foot Farley Post Office complex will have 30% more passenger capacity and will
double passenger circulation space. About 15% of leases at 1250 Broadway will
roll over at approximately the same time as completion of this project.
The property, built in 1968, includes 601,000 square feet of office space;
21,000 square feet of retail space; and 48,000 square feet of parking.
Floorplates range between 13,100 and 24,000 square feet. The building has a
diversified tenant base, including:
Tenant Square Footage
The City of New York 48,000
Visiting Nurse Services 168,000
The New York Transit Authority 44,500
Twenty-Four Seven Media, Inc. 40,500
Information Builders 88,500
Commenting on today's news, Marc Holliday, Chief Investment Officer of SL
Green noted, "This transaction, like others we have recently completed, fits
well with our stated financial objectives by offering us a good mix of cash
flow plus significant upside opportunity. In particular, the building's
location in the revitalized Penn Station submarket, when combined with our
repositioning program, should allow us to continue to attract a solid base of
creditworthy tenants, while taking advantage of escalating rents in the area.
Current average in-place office rents at 1250 Broadway are $23 per square foot
-- approximately 30% below market."
Stephen L. Green, Chairman and Chief Executive Officer of SL Green
commented "We are delighted to be able to acquire 1250 Broadway, a property
which was not even slated to come to market until later this year. In fact,
it was through the use of our strong, pre-existing industry relationships
-- generated over the past 19 years -- that we were able to negotiate this key
transaction on a preemptive basis before the property was exposed to the
market."
Mr. Green continued, "This strategic purchase reinforces SL Green's
strategy of acquiring properties in Manhattan's most dynamic submarkets and
within short walking distances of major Midtown Manhattan commuter
transportation hubs. It also further solidifies our position as New York
City's 'affordable rent expert' and the largest owner of Class B office
buildings in Midtown Manhattan."
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.
Visit SL Green's website at http://www.slgreen.com, or SL Green's pages at
http://www.frbinc.com.
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;
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
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