SL Green buys Reckson for $4b.

SL Green announced is acquiring Reckson Associates in a $4 billion cash and stock deal that will expand the firm's presence in Manhattan, where it is the largest public owner and operator of office properties, as well as meet what seems to be a growing initiative within the firm to diversify its holdings beyond the city's borders.

According to statements announcing the transaction released by both firms, Green will assume $2 billion of Reckson's debt and will purchase Reckson's shares for 0.10387 shares of SL Green common stock and $31.68 in cash per Reckson share, a combination that has a cash value of $43.31 per share.

It is one of the first occasions during the ongoing merger and acquisition trend in the REIT industry that the per share purchase price was below, albeit just slightly, the market stock price of the acquired firm.

Reckson ended trading on Wednesday, a day before the announcement, at $43.95 per share. The deal will result in Reckson shareholders owning 15.2% of SL Green.

As part of the deal, SL Green will assume ownership of five Reckson office buildings in Manhattan, 1350 Avenue of the Americas, 919 Third Avenue, 1185 Avenue of the Americas, 810 Seventh Avenue, and 120 West 45th Street, and class A properties in Connecticut and Westchester.

"With the addition of over four million s/f in five premiere Manhattan office buildings, we will enhance the overall quality of our portfolio at valuations that are substantially below replacement cost," Marc Holliday, SL Green's CEO, said in a statement.

"We also are pleased to acquire high quality properties in Connecticut and Westchester County locations that we feel will be likely to benefit from escalating New York City rents and occupancy trends."

The acquisition comes just a few months after SL Green shrunk its ownership interest in the Gale portfolio, a group of 20 buildings in New Jersey that SL Green owned with the Gale Company.

As part of that $500 million deal, SL Green sold its interest in 13 buildings to New Jersey based REIT Mack-Cali and partnered with Mack-Cali to co-own the remaining seven buildings.

As part of the deal, Reckson's extensive Long Island holdings, which include one of that market's most exclusive class A properties, Reckson Plaza in Uniondale, will be sold along with Reckson's 13-property Eastridge portfolio in Westchester, its twenty office properties and three development parcels in New Jersey, and all of Reckson's interests in an Australian listed property trust it launched last year, for $2.1 billion by SL Green to an investment group led by existing Reckson executive management and Marathon Asset Management.