The Real Deal New York

Ceruzzi, SMI pay SL Green $453M for land under Lipstick Building

SL Green also selling Pace University dorm at 33 Beekman

October 20, 2015 05:25PM

Marc Holliday, the Lipstick Building at 885 Third Avenue, and Louis Ceruzzi

Marc Holliday, the Lipstick Building at 885 Third Avenue, and Louis Ceruzzi

UPDATED, 12:51 a.m., Oct. 21: SL Green Realty is in contract to sell two more major properties, part of its ongoing selling spree aimed at funding its purchase of 11 Madison Avenue in August.

The real estate investment trust is selling the land beneath the Lipstick Building, at 885 Third Avenue in Midtown, for $453 million. The buyer on that deal is a partnership between Ceruzzi Properties and Shanghai Municipal Investment USA. SL Green is also selling a recently-completed  Pace University dormitory at 33 Beekman Street in the Financial District, for $196 million, to an undisclosed buyer.

The buyers for the Lipstick Building deal were revealed by the Commercial Observer. Ceruzzi and SMI are also teaming up on a $1 billion residential condominium project at 520 Fifth Avenue, as The Real Deal reported in August.

“These sales are a continuation of our previously announced strategy in connection with funding our acquisition of 11 Madison Avenue through the sale of non-core and complex assets,” David Schonbraun, the firm’s co-chief investment officer, said in a news release.

SL Green acquired the Lipstick Building site in 2007, along with partner Gramercy Capital, paying $317 million. In 2010, the REIT absorbed Gramercy, along with its stake in the venture, valuing the land at $352 million. The 34-story building itself contains 554,000 square feet of space.

The 33 Beekman Street building was developed along with the Naftali Group and completed earlier this year. The partners bought a fee interest in the site, which was previously owned by Sam Chang’s McSam Hotel Group, in 2012, with plans to convey a long-term ground lease condominium interest in the building to Pace.

The 179,000-square-foot building houses 772 dormitory beds. It’s SL Green’s second project for Pace. It also built a 609-bed dormitory with attached retail at 180 Broadway. That project was completed in 2013. – Ariel Stulberg