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New York

SL Green eyes $1B NYC property debt vehicle

REIT to start fundraising as other developers eye distress opportunities

SL Green Eyes $1B NYC Property Debt Vehicle
A photo illustration of SL Green chair Marc Holliday (Getty, SL Green)

One of New York City’s largest commercial landlords is gearing up to take advantage of the Big Apple’s growing distress. 

SL Green Realty plans to start raising funds this month for a property debt fund, according to its quarterly earnings statement reported by Bloomberg.  

SL Green chair Marc Holliday hinted in a conference last month that the forthcoming fund wouldn’t be the only one for the real estate investment trust. At the time, Holliday said $1 billion was “where we want to peg the first fund.”

News of its fundraising for the debt fund comes after SL Green has weathered its own moments of distress this year. In October, portions of the debt held by SL Green and Scott Rechler’s RXR at Worldwide Plaza in Midtown were watchlisted. The three-building office portfolio, which also includes residential and retail space, backs a $940 million loan.

Over the summer, Fitch downgraded the credit rating of Manhattan’s largest office landlord, the second time in a year that Fitch lowered the score for SL Green. The ratings agency cited risks of the office market and the company’s move toward an asset management model as concerns.

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SL Green reported a net loss of $156 million for common stockholders in the fourth quarter. The company’s net losses for the year hit $580 million.

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There are other real estate firms eyeing distress opportunities in New York City, creating competition for SL Green. RXR is teaming up with Ares Management to launch their own $1 billion fund targeting distressed office buildings, the Financial Times reported.

Starwood Capital Group CEO Barry Sternlicht said in August his REIT was “foaming at the mouth” to capitalize on distress in commercial real estate, shortly before Bloomberg reported the firm is in preliminary talks with investors regarding the launch of an opportunistic real estate fund. Starwood’s most recent distress fund closed in 2021, with more than $10 billion in commitments. 

— Holden Walter-Warner

Companies and People
SL GreenMarc Holliday
Tags
DebtDistressReal Estate Finance