Commercial landlord SL Green Realty has partnered with residential property owner Stonehenge Partners to pay some $32 million for four contiguous properties on the Upper East Side, sources told The Real Deal.
Retail investor Jeff Sutton is also expected to take an ownership stake at the site, located at the high-profile corner of 65th Street and Madison Avenue, where fashion retailer Giorgio Armani recently opened a rehabilitated space.
Armani has a lease at 752 Madison Avenue until 2025, but SL Green and Sutton may add to the Armani space, sources said.
SL Green and Stonehenge bought the ground leases for 752 Madison, along with 19 East 65th Street and 21 East 65th Street, for $14 million, according to city property records published Wednesday. They acquired 762 Madison Avenue for approximately $18 million, a source familiar with the deal said. All four buildings are part of an eight-building portfolio, which was purchased for $416-million from landlord David Frankel Realty.
The eight-building deal also included the 125-unit residential building 400 East 58th Street, which SL Green and Stonehenge acquired for approximately $48 million, and the 12-story building at 724 Fifth Avenue, where high-fashion retailer Prada is a tenant, which SL Green acquired in a joint venture with Sutton. Based on releases from SL Green, the purchase price for that building appears to have been $222.9 million, though that sale has not yet appeared in public records.
The final two properties were the five-story commercial building 44 West 55th Street, which sold for just over $4.85 million, and the 260-unit apartment building 400 East 57th Street, which sold for $109 million, city records show.
Commercial brokerage Massey Knakal Realty Services is already marketing the 44 West 55th Street property, the firm’s website shows, but without an asking price.
The exact status of Sutton’s involvement at Madison Avenue and 65th Street project is unclear. SL Green declined to comment and Sutton did not immediately return a call for comment.
While the Armani store was recently rehabilitated and has 100 feet of frontage on Madison Avenue, it is only 42-feet deep, data from PropertyShark.com shows. The adjacent properties, some suggest, could be combined with the Armani space to form a much larger retail location. For example, 19 East 65th Street and 21 East 65th Street together have 9,000 square feet of retail, office and gallery space (in addition to 17 residential units) and 762 Madison Avenue has 6,000 square feet of retail, office and gallery space, with a ground-floor lease expiring in 2013.
One aspect of the sale did raise eyebrows. The $14 million total sale price for the leases at 19 East 65th Street, 21 East 65th Street and 752 Madison Avenue, which SL Green and PropertyShark data show have a combined 25,464 square feet of commercial space, puts a very low value on the lease, of just $550 per square foot. In contrast, SL Green paid about $3,000 per square foot for the retail and commercial space at 762 Madison Avenue.