SL Green and CIF announce $390M recap at 485 Lex.

SL Green Realty Corp. and The City Investment Fund, L.P. have recapitalized 485 Lexington Avenue, the 921,000 s/f midtown Manhattan office property they bought in July 2004.

The joint venture has obtained a $390 million three year loan, which bears interest at LIBOR + 1.35%, and which can be extended for an additional two years.

Since acquisition, the building has been repositioned through a major leasing and marketing campaign that included a successful re-branding as "Grand Central Square", along with 750 Third Avenue, its neighboring property which is owned 100% by SL Green.

The building is undergoing a substantial redevelopment, including window replacements, upgrade of the retail storefronts and a significant lobby renovation. In October 2005, a lease agreement for approximately 11 years was signed with Citibank N.A., who will occupy 296,756 s/f of 485 Lexington Avenue. Subsequently, the company signed leases of 210,609 s/f with St. Paul Travelers and 52,573 s/f with Fairchild Publications, Inc. Discussions with additional potential tenants are ongoing.

HSH Nordbank AG, New York Branch fully underwrote the $390 million financing. The initial funding of the loan was approximately $293 million which was used to repay the existing loan, return 100% of the partners invested capital and provide for a return on capital that exceeded the performance thresholds established with CIF. The balance of the loan will be used to fund the remaining renovations, lease up and tenant improvements for the building.

According to HSH Nordbank, "The financing was made available to the SL Green / CIF joint venture as a result of the overall structure of the transaction which was secured by a great asset, in a great location, and owned by a great borrower."

As a result of exceeding the performance thresholds established with CIF, SL Green's economic stake in the property will increase from 30% to 50%. SL Green will use its portion of the refinancing proceeds to repay its unsecured revolving credit facility and for future investments.

Andrew Mathias, chief investment officer of SL Green, commented, "Our ability to recapitalize 485 Lexington only 19 months after we acquired it, is testimony to the outstanding job done by our company in recognizing the property's potential and realizing that value through effective redevelopment and leasing.

"SL Green continues to build on its strong track record of identifying and executing on opportunities that will deliver maximum value to our investors. We intend to continue capitalizing on such opportunities in a market where we have superior market knowledge."

Sonnenblick Goldman acted as the exclusive financial advisors to the joint venture for this transaction.