Pressing his campaign to establish a formidable East Midtown core, SL Green has added another trophy to his burgeoning portfolio. The city’s largest commercial landlord bought the bankrupt 245 Park Avenue in a deal struck on Friday.
SL Green’s unexpected 100% acquisition of the 48-story, 1.8 million square foot office tower culminated in a grueling battle with the tower’s beleaguered former owner, HNA, a subsidiary of PWM Property Management. in China.
Tower lenders have agreed to keep $1.2 billion in fixed-rate term loans in place on most original terms — key to a complex deal SL Green struck with a slew of lenders and creditors wishing to place the asset under competent management in subsequent years. of turmoil.
Scott Weiner, partner at major lender, Apollo, said the new owner “has worked tirelessly to successfully steer the asset through HNA’s bankruptcy process, demonstrating why they are so well respected in the lending market. institutional capital”.
The deal gives SL Green full control of the property, which “continues to be subject to existing mortgage and mezzanine loans totaling $1.768 billion, which mature in June 2027,” the announcement said.
The 1967 tower stands on the east side of the avenue between East 46e and 47e streets, diagonally across from the new rising JP Morgan headquarters tower.
HNA bought 245 Park for $2.2 billion in 2017 and SL Green bought a preferred stake for $148 million in 2018. The owners were soon at war as HNA inexplicably placed 245 Park in bankruptcy despite a stream positive cash flow and ousted SLG as management company. .
In May, an arbitrator ruled that HNA should pay SL Green $185 million for his actions. In July, a court strengthened the judgment that SL Green will act to enforce.
Buoyed by a revitalized rental market in the Park Avenue area, publicly traded SL Green, which developed One Vanderbilt, is right on the East Side. It is a joint venture partner with Vornado at 280 Park Ave. and recently purchased 450 Park Ave. for $455 million. He is redeveloping One Madison Avenue where IBM signed a huge lease. Last week, he sold more than half of the office floors of the Lipstick Building in Memorial Sloan-Kettering for about $300 million.
General Manager Marc Holliday said 245 Park will immediately begin a repositioning and upgrade. The plan includes new lobbies on the Park and Lexington Avenue side of the tower, a redesigned public plaza, infrastructure advancements, new retail storefronts and amenities for tenants such as fitness and wellness centers and catering services organized by Daniel Boulud’s Dinex company.
KPF architects will participate in the redesign.
Holliday said, “This is another example of what you’ve seen us do over the years. We start by investing in assets through our debt program. Then we managed to convert to shareholding. »
SL Green’s initial investment in 2018 with HNA “allowed us to rent and get to know the property,” Holliday said.
“The new chapter starts tomorrow,” Holliday told us on Friday. “Our goal is to take a path where we improve both the building and the public spaces near Grand Central Terminal.
“The plan will unfold over time,” he said.
A key component will be to redesign the plaza on the Park Avenue side to better integrate it with other pedestrian-friendly changes planned for the corridor.
Additionally, the tower “has an amazing roof that isn’t used much,” Holliday said. “The great views it offers could become open to the public – not like Summit [at the top of One Vanderbilt]but like a park in the sky.
The building is currently just over 70% let to tenants such as Société Générale Americas, Houlihan Loukey and Angelo Gordon & Co.
SL Green leasing manager Steven Durels said approximately 500,000 square feet will roll by the end of 2023. Floor plates of 70,000 square feet in the podium and 37,000 square feet on the upper floors superiors are ideal for financial companies. No outside rental agent has been chosen yet.
Holliday said asking rents will depend “on the final cost of the redevelopment. But our [low acquisition] The cost basis allows us to price the building very competitively, well below new construction. In fact, “monstrously below,” he laughed, though rents will still be in the triple digits.
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