Allianz Real Estate Buying Minority Stake in SL Green’s 1515 Broadway
German investment giant reportedly shelling out $420M for 43 percent interest in Times Square tower
SL Green Realty Corp. is selling a 43 percent stake in its 1515 Broadway office tower to German investment giant Allianz Real Estate, in a deal that values the property at $1.95 billion and scuppers previous reports that a major Chinese sovereign wealth fund would be investing in the Times Square asset.
Affiliates of Allianz Real Estate—the real estate investment and asset manager operating under the umbrella of Munich-based financial services conglomerate Allianz SE—will acquire a minority stake in the 57-story, 1.86-million-square-foot office building between West 44th and West 45th Streets, SL Green announced today.
The deal values the property at $1,045 per square foot including debt, with Allianz set to pay around $460 million in equity for its stake in 1515 Broadway, according The New York Post, which first reported news of the Allianz deal. The transaction, which is set to close in the first quarter of 2018, also dispels reports from earlier this year that China Investment Corporation was prepared to purchase a 49 percent stake in the office tower; that deal also would have valued 1515 Broadway at close to $2 billion.
SL Green has spent most of the year shopping a minority interest in the building after tapping the Cushman & Wakefield team of Douglas Harmon and Adam Spies to market the property, and said it will realize cash proceeds of around $416 million upon the transaction’s closing.
Isaac Zion, the real estate investment trust’s co-chief investment officer, said in a statement that the company “look[s] forward to a long-term, mutually beneficial relationship with Allianz on 1515 Broadway and to future investment opportunities together,” while Andrew Mathias, SL Green’s president, said the transaction “speaks to the continued strong interest from overseas investors in New York City office assets, as well as the strength of the Times Square office and retail market.”
The REIT acquired 1515 Broadway in a joint venture with Ivanhoé Cambridge’s SITQ subsidiary for $480 million in 2002; SL Green subsequently bought out its partner to acquire full control of the building in 2011, in a deal that valued the asset at $1.2 billion. It subsequently pursued an extensive renovation of the property and, in 2012, secured anchor office tenant Viacom to a 1.6-million-square-foot renewal and expansion that runs through 2031.
Allianz Real Estate’s most notable recent New York City deal was its acquisition last year of a 44 percent stake in the 10 Hudson Yards office tower from Tapestry Inc. (formerly known as Coach Inc.) and the Kuwait Investment Authority. Allianz said at the time that it paid roughly $420 million for its minority stake in the Hudson Yards property.
“Allianz’s investment in 1515 Broadway represents a unique and exciting opportunity to partner with SL Green and add an attractive trophy asset, with significant upside in the coming years, to our growing portfolio in New York City,” Christopher Donner, the chief executive officer of Allianz Real Estate of America, said in a statement.