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S L Green further carves its niche.

S L Green further carves its niche

Stephen L. Green said his recent acquisition of 16 East 34th Street, which he bought in a foreclosure sale from the Bank of New York, was not only a bargain, but this "arms-length" transaction has significance for the whole city.

"That's a real message to the city and the assessment community because this property was assessed much higher than the value it sold for," said Green, chairman of S L Green Real Estate, Inc.

In addition, he said, it is a positive sign for the city that he and his partners, clients of Loeb Partners Realty, put up in excess of 30 percent cash.

The bank, which held a $45 million mortgage on the property, regained possession of the building in a foreclosure action in August. Green and partners represented by Peter Hauspurg, president of Eastern Consolidated Properties Inc., purchased the building for $23.5 million in a close bidding process.

"I think we got the property because the Bank of New York, which is going to be retaining the financing, (wanted) an operation that has a tradition and a track record of maintaining and upgrading these properties," said Green.

S L Green is known for acquiring older, under-valued buildings, many through net lease arrangements, and for his skill in upgrading them and increasing occupancy. His portfolio includes 333 East 38th Street, 415 Park Avenue South and 470 Park Avenue South, and 1414 Sixth Avenue.

These "B" properties, mostly built between the early 1900's and 1940, said Green, comprise 80 to 95 percent of the buildings in Manhattan and where the bulk of loans by commercial banks are made.

"We see skyscrapers and new buildings, but the vast majority are the older buildings," he said. These include lofts

These structures, Green said, are unique in their operational requirements and problems, and they require a labor intensive effort for leasing, operations and construction. S L Green has the capability to do all that in house.

According to Nancy Peck, president of S L Green, many of these buildings were constructed for a different use possibly manufacturing. From a construction perspective, she said, they must bring the buildings to a higher code level and upgrade or install systems to comply with all the new codes.

Last year, the firm started an asset management division for assisting owners and financial institutions in running and improving these buildings. They were recently appointed by the receiver for 432 Park Ave South. These owners, especially the banks, Green said, want to make a better product that they can sell at a later date at the highest price possible.

"They need a firm like ours," he said. "They cannot do it themselves or just use a promotional brokerage firm because they're not equipped to handle such a property."

For 16 East 34th Street, Green said, he wants to create "a presence on 34th Street" with this building that lies in between Penn Station and Grand Central. The building is currently 50 percent vacant, but Green will soon embark on an ambitious leasing program. He also plans to upgrade the lobby, and install elevators, windows, and package units and provide improved services.

Green boasts a 4 percent vacancy rate for the roughly 3 million square feet he owns in 12 office buildings. S L Green recently signed a 75,000-square-foot lease with New York Hospital at the recently upgraded 333 East 38th Street. The lease brings the 436,000-square-foot former UPS warehouse building to 100 percent occupancy. He also completed the renovation at 215 Park Avenue South, finished most of the modernization at 800 Second Avenue, which is 100 percent occupied, and began the upgrading of 1414 Avenue of the Americas.

"All of those were older buildings, all were underdeveloped. All had their problems," said Green.

PHOTO : 16 East 34th Street
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Article Type:Company Profile
Date:Oct 16, 1991
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