The Real Deal New York

SL Green just put another office tower on the block. Here’s why

REIT will use proceeds to fund stock buyback program
By Rich Bockmann | January 24, 2019 04:10PM

Marc Holliday and 521 Fifth Avenue (Credit: SL Green and Google Maps)

The former Lefcourt Building on Fifth Avenue just north of Bryant Park is the latest property that SL Green Realty is looking to sell in order to finance its stock buyback program.

The real estate investment trust its partners are soon going to put the 500,000-square-foot building at 521 Fifth Avenue on the market, company executives said on their earnings call Thursday afternoon.

“Befitting of the program of trying to recycle assets like that into stock that we think is trading at a heavily discounted basis, we think that that has reached a point in time that we’re going to put that in the market,” SL Green CEO Marc Holliday said.

Holliday didn’t say anything about pricing, but sources familiar with the building valued it at $450 million earlier last year.

That’s when SL Green’s partners on the property – a joint venture between LaSalle Investment Management and Quantum Global Real Estate – put their 49.5 percent minority stake on market.

SL Green bought the 38-story pre-war building in 2011 for $225 million, and sold the minority stake to the LaSalle and Quantum Global JV (known as Plaza Global Real Estate Partners) for $72 million.

The retail is leased to Urban Outfitters and Equinox. Office tenants include Chinatrust Commercial Bank, Berkadia Commercial Mortgage and KGS Capital Markets.

“It’s a great building, great asset,” Holliday said. “We’ve owned it for a long period of time. It’s well leased.”

With its stock trading at a heavy discount to the value of its properties, SL Green in recent years has been selling assets to fund its aggressive stock buyback program.

The REIT in November green-lighted another $500 million for the program, bringing the total authorization to $2.5 billion. SL Green is also considering selling the News Building at 220 East 42nd Street, which could hit the market with an asking price as high as $1 billion.