SL Green to Take Over Management of 245 Park Ave. as HNA Seeks Buyer
(Bloomberg) -- SL Green Realty Corp. will take over operations of 245 Park Ave., a Manhattan skyscraper that’s among more than 90 worldwide assets that China’s HNA Group Co. is trying to sell to reduce debt. HNA last year paid a near-record $2.21 billion for the property.
SL Green modified an initial preferred-equity deal it made in June, making its investment in the tower $148.2 million. As part of the arrangement, the company -- New York City’s biggest office landlord -- will oversee leasing and operations as the building’s manager, it said in a statement Friday.
“Aside from us running the day-to-day, we’re going to provide as much strategic guidance as we can in order to maximize value of the asset for HNA because it’s something that they don’t do,” said Isaac Zion, SL Green’s co-chief investment officer, referring to the building’s leasing and operations.
While SL Green will handle things like fielding tenant requests, intervening when repairs are needed and enhancing the building’s services, it will share decision-making power with HNA, said Steve Durels, SL Green’s director of leasing and real property.
“It’s a vote no different than if we had a regular JV equity investor partner,” he said. “When it comes time to make a decision on deals that we want to move forward on, then it’s a partner-level kind of conversation.”
The price HNA Group paid for the skyscraper was among the highest ever for a Manhattan office building. The troubled Chinese conglomerate, among the most prolific dealmakers in recent years, is under pressure to unwind its global spending spree.
Bloomberg reported in April that SL Green was in discussions with HNA to purchase 245 Park, according to people with knowledge of the matter. In addition to a sale, another option that was discussed was a debt recapitalization of the property, said the people. Representatives for both companies declined to comment at the time.
The 44-story tower, built in 1967, stands near Grand Central Terminal in Midtown and is 91 percent leased. Its tenants include French bank Societe Generale SA, alternative investment firm Angelo Gordon & Co. and Major League Baseball, which has plans to move out. JPMorgan Chase & Co. may also leave and consolidate in the new headquarters it’s planning to construct nearby.
SL Green had said on its October earnings call that it was working toward a phase-two investment that may include more direct equity and control in the tower. The company previously provided a $110.5 million mezzanine loan to HNA for 245 Park, according to a December 2017 investor presentation. It has no other investments in the building planned at this time, Durels said.
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