SL Green Sells Manhattan Tower for $633M

625 Madison Ave. Image courtesy of CommercialEdge

SL Green Realty Corp. has agreed to sell the fee ownership interest in 625 Madison Ave., a 17-story, 563,000-square-foot Class A+ office building in Midtown Manhattan.

The borough’s largest office landlord and its partners are selling the property to an undisclosed buyer for $632.5 million, at a value of $1,123 per square foot. As part of the sale, SL Green will originate a $234.5 million preferred equity investment in the property, and will use the net proceeds to repay corporate debt.

The end of a lengthy battle

The transaction follows a decade-long battle for the building’s ownership rights, which SL Green acquired in full earlier this year in August. SL Green had acquired the leasehold to 625 Madison in 2004 for $230 million, according to CommercialEdge information.

Nine years later, Ashkenazy Acquisition Corp. purchased the ground under the building for $400 million, financed in part with a $195 million mezzanine loan from Children’s Investment Fund, according to a report from The Real Deal. Initially, the firm’s intent was to replace the tower with luxury condominiums, anticipating a significant increase in rent in 2022. In 2018, the firm defaulted on a $40 million debt repayment, and SL Green purchased a majority stake of Ashkenazy’s debt a year later. In June of this year, SL Green and its partners foreclosed on the loan, after a $20.25 million rent reset, leading to an auction that ran through August, where the firm took over the entirety of Ashkenazy’s ownership.

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The sale is one of the city’s largest office deals this year, at a time when the sector is reeling from high interest rates, little available debt and financing options, as well as low occupancy rates. Still, SL Green has remained active throughout 2023. In September, the landlord put the finishing touches on the $2.3 billion redevelopment of One Madison Avenue, a 1.4 million-square-foot historic office building in Gramercy Park. In June, the firm sold roughly half of its ownership equity in 245 Park Ave. to Mori Trust Co.

625 Madison, at a glance

625 Madison was built in two phases in 1930 and 1956, and underwent a complete renovation in 1988, CommercialEdge data shows. Ralph Lauren, the building’s longtime tenant, vacated its 300,000-square-foot space in 2019. Current office tenants include Firmenich Inc., while LAVO, Fratelli Rosetti and Bascome all operate retail spaces on the ground floor. Around Midtown, the building has access to myriad luxury retail, dining and transportation options, and Central Park lies under a quarter mile to the northwest.

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