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SL Green takes control of Park Ave. office tower from bankrupt China firm

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Pressing its campaign to ascertain a formidable East Midtown core, SL Green added one other trophy to its burgeoning portfolio. The town’s largest industrial landlord purchased 245 Park Avenue out of bankruptcy in a deal that closed on Friday.

SL Green’s unexpected, 100% acquisition of the 48-story, 1.8 million square-foot office tower climaxed a grueling battle with the tower’s distressed former owner HNA, an affiliate of China’s PWM Property Management.

The tower’s lenders agreed to take care of in-place $1.2 billion of fixed-rate term indebtedness on mostly the unique terms – key to a fancy agreement SL Green made with a slew of lenders and creditors who were wanting to bring the asset under competent stewardship following years of turmoil.

Scott Weiner, a partner at one major lender, Apollo, said the brand new owner “worked tirelessly to successfully steer the asset through HNA’s bankruptcy process, demonstrating why they’re so well-respected within the institutional capital market.”

The deal gives SL Green total control of the property, which “continues to be subject to the in-place mortgage and mezzanine loans totaling $1.768 billion, which mature in June 2027,” the announcement said.

The 1967-vintage tower stands on the east side of the avenue between East forty sixth and forty seventh streets, diagonally opposite the rising latest JP Morgan headquarters tower.

HNA bought 245 Park for $2.2 billion in 2017 and SL Green bought a $148 million preferred-equity stake in 2018. The landlords were soon at war as HNA inexplicably placed 245 Park in bankruptcy despite a positive money flow, and ousted SLG as its management company.

In May, an arbitrator ruled that HNA must pay SL Green $185 million for its actions. In July, a court reinforced the judgment which SL Green will act to implement.

A few of the constructing upgrades to be implemented include a re-designed public plaza, infrastructure advances, latest retail storefronts and tenants’ amenities.SL Green

Buoyed by a revitalized Park Avenue-area leasing market, publicly traded SL Green, which developed One Vanderbilt, is on an East Side roll. It’s a joint-venture partner with Vornado in 280 Park Ave. and recently bought 450 Park Ave. for $455 million. It’s meanwhile re-developing One Madison Avenue where IBM signed an enormous lease. Last week, it sold greater than half of the Lipstick Constructing’s office floors to Memorial Sloan-Kettering for about $300 million.

Chief executive Marc Holliday said that 245 Park will immediately begin a repositioning and upgrading. The plan includes latest lobbies on the tower’s Park and Lexington avenue sides, a re-designed public plaza, infrastructure advances, latest retail storefronts and tenants’ amenities equivalent to fitness and wellness centers and food services curated by Daniel Boulud’s Dinex company.

KPF architects will assist on the redesign.

Holliday said, “That is one other example of what you’ve seen us do over time. We start out making investments in assets through our debt program. Then we successfully convert to equity ownership.”

SL Green’s initial 2018 investment with HNA “allowed us to lease and get to know the property,” Holliday said.

“The brand new chapter begins tomorrow,” Holliday told us on Friday. “It’s our goal to take a path where we’re improving each the constructing and the general public realms near Grand Central Terminal.

“The plan will unfold over time,” he said.

A key part shall be to re-imagine the Park Avenue-side plaza in order to higher integrate it into other pedestrian-friendly changes planned within the corridor.

What’s more, the tower “has a rare rooftop that isn’t much utilized,” Holliday said. “The good views it provides might change into open to the general public — not like Summit [at the top of One Vanderbilt], but like a park within the sky.”

The constructing is currently just over 70% leased to tenants including Societe Generale Americas, Houlihan Loukey and Angelo Gordon & Co.

SL Green leasing director Steven Durels said that roughly 500,000 square feet would roll by the tip of 2023. Floor plates of 70,000 square feet in the rostrum and 37,000 square feet on higher floors are ideally suited to financial firms. No outside leasing agent has been chosen yet.

Holliday said that asking rents will depend “on the ultimate cost of redevelopment. But our [low acquisition] cost basis allows us to cost the constructing very competitively, far below latest construction.” Actually, “monstrously below,” he chuckled — although rents will still be in triple digits.

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