The N.Y.-based real estate investment trust (REIT), SL Green Realty Corp (SLG - Analyst Report) penned an agreement to purchase The Olivia – a mixed-use residential and commercial building – at the gateway to Manhattan’s far west side, for $386 million. The move depicts SL Green’s strategy to expand its multifamily investment platform in the U.S., especially New York, given the booming residential market there.
Completed in 2012, The Olivia is a 36-story building situated at 315 West 33rd Street. The property, spanning 492,987 square feet, comprises 333 luxury rental apartments and 270,000 square feet of commercial space (100% leased), along with 5 retail outlets, 2 office suites, a movie theater and a parking garage. The Olivia is currently owned by Stonehenge Partners, a N.Y.-based private real estate company. The above-mentioned buyout also includes an adjacent lot.
We view the deal as a strategic fit for SL Green, given the asset’s location between 8th and 9th Avenues and its proximity to the Hudson Yards Redevelopment Project, which is a Related Companies’ proposed mix-use project. Particularly, the Hudson Yards Redevelopment Project is expected to drive customer traffic and thereby strengthen the retail corridor. Hence, management views this as a vital factor in enhancing the value of The Olivia’s retail component.
SL Green primarily acquires, owns, repositions and manages Manhattan commercial properties. As of Jun 30, 2013, the company owned interests in 87 Manhattan properties totaling more than 42.8 million square feet.
SL Green currently carries a Zacks Rank #2 (Buy). Other better performing REITs include Winthrop Realty Trust (FUR - Snapshot Report), Highwoods Properties, Inc (HIW - Analyst Report) and EastGroup Properties (EGP - Snapshot Report). While Winthrop carries a Zacks Rank #1 (Strong Buy), Highwoods and EastGroup have a Zacks Rank #2.