485 Lexington Avenue

The one-time buyers of a 49.5 percent stake in 485 Lexington Avenue, located between 46th and 47th streets, are suing SL Green for breach of contract, alleging that the real estate investment trust had made a deal with them out of desperation, only to negate the transaction once it became more fiscally stable, Crain’s reported. While insiders said that the $504 million deal broke down because the servicer CW Capital refused approval, the plaintiffs in the suit, two companies known as Gilmore and Optibase, which had intended to purchase the building stake under a joint venture called “Mazal,” claim differently. They say that SL Green kept them in the dark regarding its negotiations with CW Captial and that the servicer’s requests were outlandish and unreasonable. David Scharf, Mazal’s lawyer, said that something was amiss. “We believe there is something nefarious going on here,” Scharf said. “SL Green was looking for a reason to back out.”
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With commercial property values spiraling downward, foreign investors are looking to inject capital into Manhattan’s premier buildings, but some experts say they’re too eager for their own good. There’s not enough product to go around, said columnist Lois Weiss, and foreigners are having trouble securing bids on properties, or even getting their calls returned. “Everyone shows up wanting to buy trophies on the cheap and thinks they’re going to steal the Empire State Building or the Chrysler Building,” said Will Silverman of Studley’s capital markets group. Nonetheless, many foreign investors are succeeding in their efforts, and benefiting from exchange rates to boot. Recently, Joseph Cayre partnered with Israeli IDB Associates in purchasing 452 Fifth Avenue from HSBC at $400 per foot, and another Israeli company, Gilmore and Optibase, is acquiring SL Green Realty’s 485 Lexington Avenue at $560 per foot. The Middle Eastern Safra family is in serious talks to buy a 49 percent interest in 299 Park Avenue from UBS, and the Italian Sorgente Group purchased a piece of the Flatiron Building this week. [Post, 1st item]

SL Green Realty will sell 49.5 percent of its interest in 485 Lexington Avenue, a commercial office building between 46th and 47th streets, according to a press release the company sent out today. The space sold for $547 per square foot. The purchasing party was a joint venture partnership comprised of Optibase and Gilmor USA through Mazal 485, according to a press release from the Carlton Group, which represented Mazal. SL Green CEO Marc Holliday said he believes this deal represents strength in the Midtown real estate market. “If ultimately approved, the transaction would demonstrate that the Midtown Manhattan office market continues to stand as one of the world’s top locations and that investor interest is once again on the rise,” Holliday said. Cushman & Wakefield represented SL Green in the transaction. “485 Lexington is an
anomaly,” Howard Michaels, chairman of the Carlton Group said. “It’s a tremendous asset located two blocks from Grand Central, which is 98 percent leased, to credit quality tenants with
virtually no turnover for seven years.” TRD

From the June issue: SL Green Realty’s 32-story office tower at 485 Lexington Avenue is
on the market with an asking price of $525 million, the New York Post
reported. The 921,000-square-foot building, between 46th and 47th
streets, has $450 million in assumable debt through 2017. Citigroup is
the lead tenant at the property, also known as Grand Central Square. SL
Green had been in discussions to sell the building to Murray Hill
Properties for $555 million, but talks reportedly have stalled. SL
Green bought the property, and the adjacent building at 750 Third
Avenue, for $480 million in 2004. Jon Caplan, Scott Latham, Richard
Baxter and Ron Cohen of Cushman & Wakefield are marketing the
building. [more]

Magazine giant Conde Nast is shedding office space at 485 Lexington Avenue, the New York Post reported. The company has subleased more than 54,000 square feet at the building, which houses its Golf Digest publication, to Edison Schools, a company providing commercial management of public schools. The asking rent was $45, and Conde Nast’s lease had 13 years left. It is not known how much rent Conde Nast was paying or where the staffers from 485 Lexington will be moved.