SL Green closes 625 Madison Ave saga with $630M sale to Related
Landlord has pulled off two of the year’s biggest deals in NYC
SL Green has struck a deal to sell the Plaza District office building at 625 Madison Avenue for more than $600 million, the final move in a high-stakes set of maneuvers over the property.
The Marc Holliday-led REIT is in contract to sell the 17-story office building for $633 million, The Real Deal has learned. A source later identified the buyer as the Related Companies.
Crain’s first named Related as the buyer late Monday afternoon. Related did not immediately comment.
The deal is set to be one of the largest office transactions in a year starved for big-ticket sales. It also closes out an epic chapter in the story of 625 Madison, in which SL Green outmaneuvered investor Ben Ashkenazy for the prize.
The two sides had been on a collision course for years at the property, which sits at East 58th and East 59th Streets, a block away from Central Park.
SL Green bought the leasehold on the 1950s-era office building in 2004, giving it the right to operate the roughly 550,000-square-foot building.
A decade later, Ashkenazy bought the ground underneath the building for $400 million — a figure that indicated he was eying a large rent increase on the leasehold when the next rent reset came in 2022.
While both sides considered the implications of the rent reset, Ashkenazy had defaulted on his $195 million mezzanine loan backing his fee position, and SL Green swooped in to buy up the debt as a bargaining chip.
An arbitrator earlier this year set the new rent at $20.5 million, and in August SL Green took over Ashkenazy’s position through a UCC mezzanine foreclosure. There were no other bidders at the auction.
This current deal values the property at more than $1,100 per square foot.
A representative for SL Green, which will hold its investor day later today, declined to comment. The company is selling the property through a joint venture with Winthrop Capital Advisors.
The office sales market has been virtually lifeless this year with rising interest rates and the negative sentiment around offices post-pandemic, but SL Green has managed to pull off two of the year’s biggest deals.
Over the summer, the REIT sold a 50-percent stake in 245 Park Avenue to Japanese developer Mori Trust at a valuation of $2 billion. SL Green had acquired the property when the former owner, China’s HNA Group, put it into bankruptcy.
This article has been updated with information about the buyer of 625 Madison Avenue.