SL Green Realty gets additional $575M in construction financing for office in Flatiron District, part of $1.25B deal

SL Green Realty through the entity 1 Madison Office Fee LLC as borrower, along with partners Hines and National Pension Service of Korea, signed  construction debt with lender Wells Fargo valued at $575 million for the office building (O6) at 1 Madison Avenue in Flatiron District, Manhattan. This debt is on top of the $850 million of debt already recorded for the project. This is part of the announced $1.25 billion in financing from Wells Fargo, TD Bank, Goldman Sachs, Bank of America, Deutsche Bank and Axos Bank.
The deal closed on December 9, 2022 and was recorded on December 22, 2022. The property has 1.4 million square feet of built space planned, according to the developers.
The signatory for SL Green Realty was Andrew S. Levine.

The property

The 1 Madison Avenue parcel has frontage of 122 feet and is 425 feet deep with a total lot size of 77,577 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $423 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received two DOB violations, $15,000 in ECB penalties, and $15,675 in OATH penalties in the last year.

Development

On the lot, there is a major alteration project for a 1,256,360 square-foot office (B) building developed by John Krush with plans filed November 14, 2019 and permitted January 26, 2021.

The neighborhood

In Flatiron District, the majority, or 72 percent of the 23.7 million square feet of commercial built space are office buildings, with elevator buildings next occupying 15 percent of the space. In sales, Flatiron District has the 10th highest sale turnover among other neighborhoods in the city with $1.4 billion in sales volume in the last two years. For development, Flatiron District has 1.5 times the average amount of major developments relative to other neighborhoods and is the 20th highest in Manhattan. It had 1.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 7 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of one of the two commercial properties representing 1,176,911 square feet of the 1,429,020 square feet. The identified owner is Hines.
There are no active new building construction projects on this tax block.

The majority, or 82 percent of the 1.4 million square feet of built space are office buildings, with hotel buildings next occupying 18 percent of the space.

The borrower

The PincusCo database currently indicates that SL Green Realty owned at least 39 commercial properties in New York City with 17,921,652 square feet and a city-determined market value of $7.4 billion. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 95 percent of the 17,921,652 square feet of built space are office properties, with elevator properties next occupying 4 percent of the space. They are all located in Manhattan.

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