SL Green Grabs Partner’s Half of 521 Fifth Ave.

January 10, 2011
By Barbra Murray, Contributing Editor

SL Green Realty Corp. has gone from co-owner to full owner of the Manhattan office property at 521 Fifth Ave. New York City’s largest office landlord acquired joint venture partner City Investment Fund L.P.’s 49.9 percent stake in the 490,000 square-foot tower, courtesy of a deal that places a $245.7 million price tag on the asset.

The transaction comes almost exactly four years after SL Green announced an agreement with CIF to recapitalize 521 Fifth Avenue in a $240 million transaction that left CIF with its minority interest in the property. The partners later invested $26.7 million to transform the building, originally developed in 1929, into a premier office destination with high-end retail space, 32,000 square feet of which Urban Outfitters leased in September 2010. With an occupancy level of approximately 80 percent, the tenant roster at the 39-story tower is nowhere near full, but with occupants like Nippon Life Insurance Co., it reads well.

SL Green also owns a $140 million mortgage on 521 Fifth Ave. that carries an interest rate of 1.31 percent and will mature in April of this year. “Assuming SLG can increase the office occupancy, the building may be a candidate to be refinanced at a higher valuation in late 2011, allowing SLG to pull out proceeds to redeploy into other investments,” Rob Stevenson, managing director and head of U.S. REIT research with Macquarie Capital (USA) Inc., wrote in a note on the transaction. “The company is off to a strong investment start to 2011.”