Jones Lang LaSalle


SL Green Takes Leasehold, Enters JV
By Barbara Jarvie
Last updated: March 17, 2006 12:08pm

NEW YORK CITY-SL Green Realty Corp. has acquired a long-term operating net leasehold interest in 521 Fifth Ave. The deal includes an option to acquire fee ownership in five years and--assuming SL Green exercises that option--the total cost would be $225 million.

The 40-story, 460,000-sf office currently has an ownership group led by RFR Holding LLC, which retained fee ownership. On the tenant roster at the 98%-occupied tower are Abberley Kooiman, Rosner, Bresler, Goodman and Bucholz as well as Moroze Sherman Gordon and Gordon. SL Green also completed a joint venture for its One Madison Ave. residential condominium project with a partnership comprised of RFR, Credit Suisse and Ian Schrager.

Andrew Mathias, chief investment officer of SL Green, says the addition builds on the firm’s position in the Fifth Avenue office corridor and provides them with "another venue to execute a retail strategy and create additional value." Floor plates range from 22,000 sf at its base to 6,000 sf in its tower. With an upcoming vacancy scheduled, SL Green plans to redevelop and reposition the building. Darcy Stacom of CB Richard Ellis acted as exclusive agent for RFR Holding.

In the other deal, the arrangement calls for the venture to convert the 43-story landmark building--known as the Clocktower--into residential condominiums. A project timetable will be released at a later date. SL Green will retain a 30% interest in the Clocktower. The arrangement provides Ian Schrager and RFR with the ability to increase its ownership interest if certain incentive return thresholds are achieved. In this deal, CBRE’s Stacom acted as exclusive agent for SL Green.