New York City commercial property giant SL Green recently announced it has reached an agreement to sell its 36-story office tower at 600 Lexington Ave. in Manhattan, for a gross sale price of $305 million, or $1,005 per square foot. The buyer has not yet been disclosed, but Real Estate Weekly reports the 304,750-square-foot tower will go to a U.S.-based insurance company. The sale is expected to close by the first quarter of 2018, and generate net cash proceeds of roughly $292 million.
SL Green, which paid $193 million to acquire 600 LEX from Hines Interests in 2010, put the property up for sale just last month, with CBRE in charge of marketing the asset. According to The Real Deal, the decision to sell the Central Midtown tower comes as a result of a slowdown of the Manhattan investment sales market. Our latest Manhattan report actually shows that Q3 2017 was the weakest quarter of the past five years for the borough, in terms of office sales volume, dropping below the $1 billion mark.
Built in 1983, the Class A+ high-rise at 600 Lexington was cosmetically renovated in 2010, includes 2,577 square feet of retail space, and boasts LEED Gold certification, according to data gathered by Yardi Matrix. The building is subject to an air rights lease held by RFR Holding, and is 99% leased to tenants such as MKP Capital Management, Transwestern, Nissan, PCG, Altaris and Fika, among others. In 2010, the property became subject to a $125 million loan funded by Wells Fargo, which SL Green paid off in the fall of 2016.
“The sale of 600 Lexington represents the culmination of a strategic approach that started with a distinct business plan to make targeted capital improvements in order to increase occupancy and improve the rent profile of the building, and now ends with the opportunity to redeploy the net proceeds we’ve generated into other investment prospects,” Isaac Zion, SL Green’s co-chief investment officer, said in a statement. “This transaction not only completes an exceptional investment for us, it further demonstrates continued investor demand for East Midtown assets.”