Gramercy Capital buys 45% share in 1 Mad. Ave.SL Green Realty Corp. has partnered with its subsiduary, Gramercy Capital Corp. in its $918 million purchase of 1 Madison Avenue. The joint venture agreement for a 45% ownership interest in the South Building follows SL Green's announcement last month that it would buy 1 Madison and identify a joint venture partner for the South Building. Gramercy will own a 45% interest and SL Green will own a 55% interest in the 1.2 million square foot South Building. Gramercy and SL Green will acquire the building on a pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. basis for approximately $803 million. The closing is scheduled for the second quarter of 2005. One Madison Avenue consists of two contiguous buildings--the South Building and the North Tower--totaling approximately 1.4 million square feet. The South building, which is 95 percent net leased to Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. through 2020, comprises 1.2 million square feet. The North Tower, which will be owned in a separate joint venture controlled by SL Green, is expected to be converted into for-sale residential condominiums. Gramercy elected not to invest in the residential portion as the transaction did not meet its investment profile. The CTL See control key. 1. CTL - Checkout Test language. 2. CTL - Compiler Target Language. 3. CTL - Computational Tree Logic is expected to generate a stable income stream through 2020 based on the strength of the 15-year lease with CSFB CSFB Credit Suisse First Boston CSFB Cyclically Shifted Filter Bank , and will be immediately accretive to earnings for both parties. The investment will also provide significant tax shelter tax shelter: see tax exemption. to Gramercy in the form of depreciation and interest expense, and has the potential for meaningful residual real estate value upon expiration of the CSFB lease in 2020. The venture also has the ability to redevelop the retail component of the South Building in participation with CSFB, which currently leases most of the retail space, thereby unlocking embedded value Embedded Value A common valuation measure used outside North America particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm. not currently utilized in the South Building. According to Marc Holliday, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Gramercy Capital Corp., "We believe this investment represents a unique opportunity for Gramercy to make a powerful entrance into the credit tenant lease A credit tenant lease is a method of financing real estate. The landlord borrows money to finance the property and pledges as security the rents to be received from the tenant. business. "The venture between SL Green and Gramercy once again signifies the strength of combining the experience and relationships of our management team with established infrastructure, market knowledge and real estate capabilities to source and share transactions that satisfy the business objectives of both companies." Under the terms of the joint venture, each member will be required to fund its pro-rata share of any additional capital contributions. The joint venture has arranged for a $690 million, 15-year, fixed-rate mortgage loan secured by the South Tower. |
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