By: Hadassa Kalatizadeh
SL Green added another trophy tower to its impressive New York City portfolio.
As reported by the NY Post, the real estate investment trust, which focuses on office buildings and shopping centers in Manhattan, purchased the building at 245 Park Avenue. On Friday, the 48-story building was bought out of bankruptcy from the tower’s troubled former owner HNA, a Chinese conglomerate, affiliated with China’s PWM Property Management. The surprising 100% acquisition adds 1.8 million square-feet of office space to SL Green’s already extensive trust.
The 1967-vintage tower is positioned between East 46th and 47th streets, across the street from JP Morgan’s upcoming headquarters tower. The asset has endured years of turmoil, under the distressed former owner. The tower’s many lenders agreed to keep the $1.2 billion of fixed-rate term in place with most of the original terms. SL Green, which is already the city’s largest commerciallandlord, needed to deal witha long list of lenders and creditors and negotiate a complex agreement. Ultimately, the lenders were eager to bring the asset under competent ownership and management, after it suffered from unrest for so long.
Scott Weiner, a partner at Apollo, one of the major lenders, said the new owner “worked tirelessly to successfully steer the asset through HNA’s bankruptcy process, demonstrating why they are so well-respected in the institutional capital market.”
The deal gives SL Green total control of the property, which “continues to be subject to the in-place mortgage and mezzanine loans totaling$1.768 billion, which mature in June 2027,” as per the announcement. Founded in 1997, SL Green boasts over 1000 employees and a revenue of $1.24 billion, as per 2019 data. As of December 31, 2019, the company owned 43 properties comprising 14,438,964 square feet. The company is listed on the NYSE stock exchange. SLG notably developed One Vanderbilt, is a joint-venture partner with Vornado for 280 Park Avenue, and recently purchased 450 Park Ave. It is also in the midst of re-developing One Madison Avenue.
The 648-foot skyscraper, at 245 Park Ave, completed in 1967, is the 94th-tallest building in New York, and one of only 41 buildings in Manhattan to boast their own ZIP Codes as of 2019. The building is currently just over 70% leased.
Per the Post, HNA had purchased the tower in 2017, for a hefty price tag of $2.2 billion SL Green had previous purchased a $148 million preferred-equity stake in the building in 2018. The landlords were soon at odds with each other though, as the Chinese conglomerate expelled SLG as its management firm, and strangely placed the tower into bankruptcy– despite its positive cash flow. In May, an arbitrator ruled that HNA must pay SL Green $185 million for ousting it as manager. In July, a court had reiterated SLG’s victory, which the company will now endeavor to collect.
Marc Holliday the company’s Chairman & CEO said they would be immediately be undertaking the task of repositioning and upgrading the building at 245 Park. As part of the effort, the lobbies will be renewed, and the public plaza will be re-designed, there will be infrastructure advances, new retail storefronts, and tenants’ amenities will be added including fitness and wellness centers and food services. KPF architects has been tapped for the redesign. “This is another example of what you’ve seen us do over the years. We start out making investments in assets through our debt program. Then we successfully convert to equity ownership,” Holliday said,
