SL Green's Tribeca Bargain
Tribeca’s 388-390 Greenwich St has had three owners in six years, but it’s down to one after SL Green bought JV partner Ivanhoe Cambridge’s interest. (Same thing happened with the Big Momma's House DVD we purchased with our roommate; we're now sole owner.) And SL Green's basis comes at a significant discount to Park Avenue.
Transwestern’s Mike Gochman (snapped last month at Wyoming's Grand Targhee Resort) tells us 388 and 390 Greenwich were pioneers for financial services-worthy floorplates in Tribeca (they delivered in ’88, well ahead of Midtown South’s recent popularity). Now, banks, just like tech companies, want happy employees, and people like working in Midtown South. But 388 and 390 Greenwich are among the only options for large tenants. So, in December, Citi renewed its triple-net lease of the 2.6M SF through 2035 and will make the complex its global HQ. It has the option to buy the properties between December 2017 to December 2020.
And yet, SL Green’s investment (388 Greenwich is above) seems to be a bargain. Its acquisition from Ivanhoe Cambridge values the pair at $1.6B, the same as when the companies bought them from Citigroup in December ’07. That pegs the deal at $609/SF, whereas Park Avenue is selling at $1,000 and up, Mike says (acknowledging that the terms of Citi’s purchase option aren’t known). Consider that Oxford Properties paid $1,700/SF for 450 Park last week.