• Sale of interest to generate about $45 million in proceeds
  • NYC property's name comes from shape, red granite exterior

SL Green Realty Corp., New York’s biggest office landlord, agreed to sell its interest in the land under Manhattan’s Lipstick Building for $453 million.

The sale will generate proceeds of about $45 million, the real estate investment trust said in a statement Tuesday. The deal was executed at an capitalization rate -- a measure of yield used by property investors -- of 3.8 percent for the buyer, whom SL Green didn’t identify.

The 453-foot (138-meter) tower at 885 Third Ave., called the Lipstick Building for its elliptical shape and red granite exterior, is owned by a group that includes IRSA Inversiones y Representaciones SA, an Argentine real estate investment company, according to research firm Real Capital Analytics Inc. The ownership group leases the ground from parties that include SL Green. Con man Bernard Madoff’s brokerage firm once occupied several floors of the building.

SL Green acquired an interest in 2007 as part of a joint venture, which was valued at $317 million at that time, and then gained all of its share of the land three years later, at a $352 million valuation, according to the statement. The $45 million of proceeds is calculated after taking into account a retained preferred equity interest and a $267.7 million mortgage scheduled to mature in 2017. The sale is likely to close in the fourth quarter, the company said.

The REIT also announced a deal to sell the recently completed Pace University dormitory tower at 33 Beekman St. in lower Manhattan for $196 million. The company owns the building in a joint venture with Naftali Group, SL Green said, without identifying the buyer.

Both transactions will help fund the $2.29 billion acquisition of 11 Madison Ave., the company said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE