Boston Properties seals $275M deal for Macklowe’s 510 Madison

Mortimer Zuckerman and 510 Madison Avenue

Boston Properties said this afternoon that it completed the acquisition of developer Harry Macklowe’s troubled office tower at 510 Madison for $275 million.

Mortimer Zuckerman’s Boston Properties agreed to buy the 350,000-square-foot office tower between 52nd and 53rd streets in August, after buying a junior mezzanine loan from O’Connor Capital Partners, which previously failed to block a workout agreement between Macklowe and senior lender SL Green.

A spokesperson for Boston Properties said the closing price was below the projected price of $281 million due to lower-than-expected closing costs.

SL Green was previously embroiled in a nearly year-long struggle to take over the building after Macklowe defaulted on his senior debt. SL Green acquired that debt and planned to foreclose on the property, but agreed to a workout agreement after a long court battle with Macklowe. SL Green is expected to gain $66 million on the sale according to one analyst’s report, as it held $280.5 million in debt on the property. It remains unclear whether SL Green was completely paid off through the acquisition. 

Boston Properties, which was not immediately available for comment, said in a statement that it expects to pay about $15 million to complete construction of the empty tower, and has incurred about $2 million in closing costs, which will be expensed during the third quarter of 2010.

As previously disclosed, Macklowe is being retained as a consultant as part of the agreement and CB Richard Ellis broker Paul Amrich will continue to manage leasing at the building.