SL Green Buying 500 Park Office Condo From Morgan Stanley for $130M
By Nicholas Rizzi November 25, 2024 6:13 pm
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SL Green (SLG) Realty is in contract to buy the office condominium at 500 Park Avenue for about $130 million, sources with knowledge of the deal confirmed.
The real estate investment trust agreed to buy the 200,000-square-foot office portion of the building, originally known as the Pepsi-Cola Building as it housed the beverage brand’s headquarters, from Morgan Stanley (MS) Prime Property Fund, sources said. Bloomberg first reported the sale.
Morgan Stanley declined to comment. Newmark (NMRK)’s Adam Spies, Marcella Fasulo, Adam Doneger, Avery Silverstein, Josh King and Doug Harmon are brokering the sale. Newmark declined to comment.
“500 Park Avenue is an extraordinary addition to our Park Avenue Corridor portfolio and a rare opportunity to own an iconic asset that hasn’t traded in more than 40 years,” Harrison Sitomer, chief investment officer of SL Green, said in a statement. “Park Avenue is the best-performing office market in New York City with historic low vacancy, and 500 Park Avenue will continue to benefit from opportunities in this fortress corridor that attracts top-tier tenants and triple-digit rents.”
The deal works out to about $650 per square foot, which a source said is a number not seen in Midtown for a long time. The source added that SL Green had to beat out bids from foreign investors in Germany, Kuwait and Japan.
SL Green tapped Newmark’s Jordan Roeschlaub and Nick Scribani to secure $90 million in acquisition financing for the purchase, which works out to 65 percent loan-to-cost, sources said. A lender has not been selected yet. Newmark declined to comment.
The office portion of the building between East 58th and East 59th streets covers 11 stories of the 40-story property, with the upper floors having 56 residential condos, according to The Real Deal.
Morgan Stanley put the office condo up for sale in September hoping to get $125 million as the investment bank tries to move away from the office market, TRD reported.
As of September, the building was 90 percent leased with tenants including Vera Wang, Georgetown Company and Friedland Properties, according to TRD.
The 500 Park deal comes amid a busy month for SL Green. The REIT kicked off November closing on a recap of the $1.3 billion loan of 5 Times Square, which it owns with RXR and Apollo Global Management, that includes a future $200 million equity infusion, as Commercial Observer previously reported.
It later secured a three-year extension on its $724.8 million mortgage at 1515 Broadway — where it’s seeking to build a casino — and sold an 11 percent stake in One Vanderbilt Avenue in a deal that set the value of the building at $4.7 billion.
The only question now is whether SL Green will be celebrating tonight by popping the Moët or cracking open a cool can of Pepsi.
– With additional reporting by Cathy Cunningham.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
