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SL Green Realty, Manhattan’s largest office landlord, is seeking cash for a $1 billion New York bond fund aimed at capitalizing on what the company describes as the city’s “continued recovery and resiliency.” There is.
The move also comes as capital markets are gaining momentum on expectations that the Federal Reserve will cut interest rates after a series of rate hikes slowed deal flow and financing activity.
“New capital is being formed in this environment,” SL Green CEO Mark Holliday said Thursday on a fourth-quarter earnings call, adding that management is headed to Asia to meet with investors. He added that
The company wants to “actively participate in the city’s recovery,” he said. “Billion-dollar funding pool announced… [with a] considerable amount [that] We plan to target the office sector. …It has already been four years since the pandemic began. The city’s business infrastructure is very strong. People went back to work. ”
SL Green was not the only large-scale real estate investor that became a hot topic. Trading begins Thursday. Blackstone, whose credit business reported positive earnings in the fourth quarter, said it’s a good time for the commercial real estate lender.
But SL Green’s Asia trip is not just about debt funds. Holliday said the company held more than 20 meetings over five days with investors to discuss debt and equity investments, as well as joint ventures and opportunities in entertainment and hospitality.
In addition to talking about the fund and other investments, a key part of the conversation will be about New York’s recovery from the COVID-19 pandemic, including office, retail and tourism, as well as the rise in average daily rates for the city’s hotels. We’re going to talk. For example, New York state has recovered jobs lost since the pandemic, with about 24,000 new businesses created since then, he said.
“It’s like a great story to be told,” Holliday said.
He may have some other examples to share. Jeff Sutton, founder and president of SL Green and his joint venture partner Wharton Properties, announced this month that The commercial condominium located at 717 Fifth Avenue was sold. It was acquired by Gucci’s parent company, Kering, for $963 million in what is said to be the largest high street retail deal in U.S. history. SL Green, which owns an approximately 11% stake, expects to earn a net profit of $27.6 million, which it will use to repay its bonds.
In the fourth quarter of 2023, SL Green also increased its interest in a joint venture holding the following leasehold interests: 2 Herald Square Broadway at the corner of 34th Street and 6th Avenue, across from Macy’s flagship store, went from 51% to 95% without any money changing hands. SL Green said the joint venture entered into an agreement to service the property’s existing $182.5 million mortgage with a net payment of $7 million, with repayment expected to be completed in the first quarter. .
“This is an asset that we need to start thinking seriously about what is the best use for it,” Holliday said. The property has been a successful office and retail property and is currently home to tenants including cosmetics retailer Ulta, which has the highest sales per square foot of any U.S. store. However, Holliday said the property could be converted into a residential building.
The property also includes tenants such as Capital One, which opened a bank and cafe on the site of the former Victoria’s Secret flagship store.
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