SL Green Lands $510M Loan for NYC Office Tower

The News Building. Image via Google Street View

SL Green Realty Corp. has just closed on new mortgage financing secured by 220 E. 42nd St., a 1.2 million-square-foot office tower in Midtown Manhattan. A lending group consisting of Aareal Capital Corp., Citi and Credit Agricole provided SL Green with the loan.  

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SL Green utilized the proceeds from the mortgage financing to repay the balance on its $1.5 billion unsecured revolving credit facility. “We always strive to keep our line balance as close to zero as possible,” Matthew DiLiberto, CFO with SL Green Realty Corp., explained of the then-pending financing plans during the company’s first quarter 2020 earnings conference call on April 23. SL Green has owned the 37-story high-rise since acquiring it from Witkoff for $265 million in 2003, after having invested an initial $53.5 million in preferred equity in the asset in 2001.

The News Building. Image via Google Street View

Originally developed as the headquarters for The New York Daily News, 220 E. 42nd opened as the architectural vision of Hood & Howells in 1930 and in 1959, expanded to its current size with the addition of an annex and low-rise structure. Today, the Art Deco-style office destination is still known as The News Building and is forever immortalized as the home of the 12-foot globe made famous by the Superman television series and films and by its distinction as the world’s largest indoor geographic sphere.

A preeminent, Class A office destination with nearly 65,000 square feet of retail space, 220 E. 42nd offers a host of high-end amenities and counts the Visiting Nurse Service of New York, Omnicom Group and local television station WPIX among its leading tenants, with all three occupying spaces ranging from approximately 100,000 to 300,000 square feet. Due in no small part to SL Green’s multi-year repositioning program, 220 E. 42nd is presently 97 percent occupied.

Plan B

News of SL Green’s new mortgage financing comes eight months after the REIT announced that it would sell 220 E. 42nd to Jacob Chetrit of the Chetrit Organization in a whopping $815 million transaction. “Obviously, preference would have been to close the deal that we contracted on, but the buyer didn’t perform. And it’s our job to adapt and react, and we did that in terms of lining up financing,” Andrew Mathias, president & director of SL Green Realty Corp., said during the earnings call. Mathias added that the company will likely pursue joint-venture ownership of 220 E. 42nd.