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SL Green (SLG) Sells 635-641 Sixth Avenue Property for $325M

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In line with its business plan for the ongoing year, SL Green Realty Corp. (SLG - Free Report) has sold 635-641 Sixth Avenue for a gross sales price of $325 million. The transaction values the Midtown South property at more than $1,200 per square foot.

The sale price indicates a significant increase from $173 million that the company shelled out in 2012 to acquire the property. Subject to customary closing norms, the transaction is anticipated to close in the ongoing quarter and will generate net cash proceeds of $312.5 million for the company.

Particularly, the property consists of two adjoined buildings aggregating eight stories across 267,000 square feet. It sits on a full western block-front on Sixth Avenue from 19th Street to 20th Street in Midtown South.

SL Green redeveloped the property in 2015, resulting in a new lobby, elevators, best-in-class building systems and a penthouse rooftop, offering outdoor amenity and event space.

Management noted that the sale at an attractive price is a “result of extensive repositioning and leasing efforts at the property, which is further evidence of the breadth of expertise that the SL Green platform brings to the table.”

In fact, the property is presently 94 percent leased, with a multi-national enterprise software company, Infor, as an anchor tenant. The lease with Infor was recently renewed and extended and the tenant will lease the space through 2030.

Markedly, the company has been resorting to non-core asset sales in a bid to enhance its liquidity to fund development projects and share buybacks. Notably, it aims dispositions of more than $1 billion for 2021.

While dispositions are strategic fits for the long term, these will be dilutive to near-term earnings. In fact, for 2021, the core portfolio GAAP net operating income is likely to be adversely impacted by property dispositions and planned sales.

Shares of this Zacks Rank #3 (Hold) company have gained 11.5% over the past three months compared with the industry's growth of 7.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

 

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