SL Green Realty Corp. (SLG) said it acquired the remaining interest in 1515 Broadway, the Times Square skyscraper that houses the headquarters of Viacom Inc. (VIA/B), in a deal that values the property at $1.21 billion.
The company bought the stake from SITQ, a real estate investment unit of Canadian pension-fund manager Caisse de Depot et Placement du Quebec, SL Green said in a statement today. The valuation for the 1.75 million-square-foot (162,600-square- meter) tower equals about $691 a square foot.
“Here we go again,” said Dan Fasulo, managing director of Real Capital Analytics Inc., a New York-based research firm that tracks commercial property sales globally. “That value is another example of how the market has improved over the last 18 months. We’re within maybe 10 percent of record levels.”
SL Green, Manhattan’s biggest office landlord, has been benefiting from climbing New York office values as vacancies decline and rents rise. The real estate investment trust yesterday said first-quarter funds from operations jumped 68 percent, beating analyst estimates, as rent revenue increased and it received income from the sale of debt on 280 Park Ave.
SL Green gained $3.31, or 4.1 percent, to $84.28 at 12:50 p.m. in New York Stock Exchange composite trading. The stock advanced 20 percent this year through yesterday, compared with a 12 percent increase in the Bloomberg REIT Office Property Index.
SITQ and SL Green paid $484 million for 1515 Broadway in 2002, according to a joint statement issued in 2005, when the partners refinanced it for $625 million. The 54-story tower was appraised at that time at $1 billion, the companies said.
SITQ had a 31.5 percent stake in the building, said Rick Matthews, a spokesman for SL Green.
The property recently underwent a $40 million renovation, including a new glass-enclosed lobby, new entrances and bathrooms. The building houses MTV Studios, where the music- video show Total Request Live was broadcast for many years. Retail tenants include Billabong, Aeropostale and Oakley.
“This is another in a line of highly successful joint ventures with SITQ, and we look forward to joining SITQ in making future investments,” SL Green President Andrew Mathias said in the statement.
A call to Caroline Lacroix, a spokeswoman for Montreal- based SITQ, wasn’t immediately returned.
SL Green’s total rent revenue increased 19 percent in the first quarter to $229 million. Total revenue was $334.3 million, up 33 percent from a year earlier. The company reported $38.7 million of additional income from the sale of debt on 280 Park Ave. to a joint venture with Vornado Realty Trust. (VNO)
The company increased its FFO projection for 2011 to between $4.65 and $4.80 a share, compared with a December estimate of $4.05 to $4.20.
Manhattan office leasing volume reached a four-and-a-half- year high in the first three months of 2011, and rents rose for a second consecutive quarter after two years of declines, Cushman & Wakefield Inc. reported on April 5. Offices above the 25th floor in top-quality Midtown buildings were more than 99 percent leased, CB Richard Ellis Group Inc. said on April 14.
SL Green’s first quarter was a “material” outperformance of analyst expectations, even given the additional 280 Park income and other one-time items, Robert Stevenson, an analyst with Macquarie Research, said in a note to clients today. New leases on 577,000 square feet were 10.6 percent more than the expired rents on that space, he said.
“SL Green posted very strong first-quarter numbers with mark-to-market on new Manhattan leases exceeding our expectations,” Stevenson wrote. “SL Green remains our favorite name in the REIT space.”
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