SL Green’s Holliday: Citi deal will allow us to play offense

By Hiten Samtani | January 31, 2014 06:15PM

SL Green Realty’s ability to persuade Citigroup to relocate its headquarters to 388 and 390 Greenwich Street was the real estate investment trust’s “crowning achievement” of the fourth quarter — and will allow the company to go on the offensive in 2014, according to CEO Marc Holliday.

The mid-December deal – which will see Citigroup renew its 2.6 million-square-foot lease at the Tribeca complex and shift its global power base from Boston Properties’ 399 Park Avenue – was the culmination of 18 months of work, Holliday said, speaking yesterday during the company’s quarterly earnings call.

He noted that the deal “made for good holidays for us.” Now that SL Green has secured anchor tenants for two of its biggest assets – the other being Viacom at 1515 Broadway — the REIT is free to pursue deals in the coming quarters, he said, according to a transcript of the call provided by Seeking Alpha.

SL Green’s Funds from Operations after transaction costs for the fourth quarter of 2013 stood at $134.5 million, or $1.38 per share, an increase from $107.2 million, or $1.14 per share, in the fourth quarter of 2012. The REIT signed 57 leases in Manhattan for a total of 3.39 million square feet, which included the Citigroup deal.

Holliday compared the Citigroup deal favorably to two other large leasing deals Downtown, namely advertising giant Group M’s decision to take 516,000 square feet at Silverstein Properties’ 3 World Trade Center and law firm Jones Day’s 330,000-square-foot deal at Brookfield Office Properties’ Brookfield Place. While Citigroup will be paying rents of about $80 per square foot, GroupM would pay $68 per square foot, and Jones Day would pay $60 per square foot, he said.

Holliday also shared the REIT’s ambitious leasing target for the year: two million square feet, or about 500,000 square feet per quarter. “I don’t know if Durels is that good,” Holliday joked, referring to SL Green’s director of leasing Steven Durels.