Real-Estate Firm Bets on Hudson Yards With New Deal -- WSJ
December 03 2018 - 3:02AM
Dow Jones News
By Peter Grant
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 3, 2018).
SL Green Realty Corp., New York's largest office building owner,
is making its biggest investment in the booming Hudson Yards area
by acquiring a 91-year-old building in a deal that values the
property at $440 million.
The real-estate investment trust is buying a majority stake in
the 21-story building at 460 W. 34th St. from the Kaufman
Organization, which is holding on to a minority interest.
The building, formerly known as the Master Printers Building, is
across the street from the modern glass and steel towers rising in
the sweeping Hudson Yards development from Related Cos. on what
used to be 26 acres of windswept rail yards. That project has
attracted such big name tenants as Time Warner Inc., BlackRock Inc.
and Kohlberg Kravis & Roberts.
SL Green plans to compete with Related's and other modern
buildings rising in the area by upgrading 460 W. 34th St., but
maintaining its older, funky vibe. It will appeal to media and
technology firms "that wouldn't be attracted to new construction,"
said Marc Holliday, SL Green's chief executive.
SL Green has been investing heavily in New York office space
even as some analysts voice concern about how much longer New
York's economy will continue to grow. Its high-profile projects
include One Vanderbilt, the 1,401-foot tower being developed across
the street from Grand Central Terminal, scheduled to open in
2020.
Manhattan's office leasing market has been healthy. But
historically, at this late stage of an economic cycle, the market
is seeing sharper rent increases and vacancy declines.
The Manhattan vacancy rate was 9.5% at the end of the third
quarter, up from 9% one year earlier, according to Cushman &
Wakefield. The average asking rent was $72.65 a square foot a year,
down from $72.67 a square foot at the end of the third quarter of
2017, the commercial real-estate services firm said.
SL Green executives say they remain bullish on New York.
"There's still very strong job growth and that's before Amazon gets
to town," said Andrew Mathias, the firm's president.
SL Green has sold more than $1.1 billion in assets this year and
used the proceeds to repurchase shares and make new investments.
The firm originally invested in 460 W. 34th St. in 2014 by making a
loan to a small minority investor at the building which was then
managed by the Kaufman Organization.
"This has been incubating for quite some time," Mr. Mathias
said.
SL Green also expects to unveil Monday detailed plans for
developing a modern tower above One Madison Ave., the century-old
building it purchased in 2005 for $918 million. The redevelopment
project, which will add an 18-story tower above the existing
limestone podium, will cost more than $1 billion, SL Green
executives said.
Write to Peter Grant at peter.grant@wsj.com
Corrections & Amplifications SL Green originally invested in
460 W. 34th St. in 2014 by making a loan to a small minority
investor at the building which was then managed by the Kaufman
Organization. An earlier version of this article incorrectly stated
that SL Green originally invested in 460 W. 34th St. in 2014 by
making a loan to the Kaufman Organization. (Dec. 2, 2018)
(END) Dow Jones Newswires
December 03, 2018 02:47 ET (07:47 GMT)
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