SL Green Said to Agree to Buy Park Avenue Tower in NYC for $330 Million

SL Green Realty Corp., New York’s biggest landlord, agreed to buy the 125 Park Avenue office building for $330 million from Shorenstein Properties LLC, according to a person with knowledge of the deal.

The 26-story tower between 41st and 42nd streets has 596,000 square feet and is 96 percent leased, said the person, who declined to be identified because the transaction isn’t public. The building is across from Grand Central Terminal.

Charlie Mallet, executive vice president for San Francisco- based Shorenstein, didn’t return calls seeking comment. Rick Matthews, a spokesman for SL Green, declined to comment.

Manhattan office rents may rise 25 percent in the next three years after falling to a three-year low, Marc Holliday, SL Green’s chief executive officer, said last week on a conference call. The company’s pending acquisition of 600 Lexington Ave. was underwritten with that assumption, he said.

Asking rents slid to $55.38 a square foot in the first quarter, according to Cushman & Wakefield Inc. Companies want 100,000 to 300,000 square-foot spaces, after a year dominated by demand from smaller tenants, Holliday said.

SL Green’s two Midtown office purchases, if they are completed, would add about 900,000 square feet to the New York- based real estate investment trust.

The Lexington Avenue tower has 36 floors and 303,515 square feet and is 94 percent leased, according to an April 15 statement. The price is $193 million, or $636 a square foot, to a joint venture led by Hines US Core Office Fund.

The Park Avenue sale would work out to $554 a square foot. That deal was reported yesterday by Real Estate Finance & Investment and Commercial Real Estate Direct, which said the capitalization rate of the proposed transaction was 4.8 percent.

UBS, in a note yesterday, estimated the rate at 5.7 percent.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

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