Japanese real estate developer Mori Trust acquired a minority share in 245 Park Ave., a 44-story Midtown office space acquired by SL Green Realty in a bankruptcy sale last year. The deal — which is the largest to date in New York City — was valued at around $2 billion and included the assumption of a $500 million mezzanine loan with an interest rate of 4.2% that’s set to mature in June 2027.
The property’s recent history captures the changing dynamics of the post-pandemic office market as it just changed hands in September 2022 amid its former owner HNA Group’s financial struggles. The Chinese REIT had taken on $1.77 billion in senior and mezzanine loans when it struck a deal for the 1.7-million-square-foot office tower in 2017. However, the loss of its anchor tenant — Major League Baseball — coupled with the retreat of Chinese investment across U.S. real estate markets, forced HNA to cut its losses and part with the building.
Despite already holding $8 billion worth of portfolio investments across various U.S. office markets, 245 Park Ave. is Mori Trust’s first such acquisition in New York City.
“245 Park Avenue experienced strong investor demand and continue[s] to see a focus on prime quality assets in New York City,” said Young Hahn, senior vice president at SL Green.
Notably, office space in Manhattan has been facing a series of challenges as of late due to rising interest rates; the growing trend toward hybrid or remote working; and the ensuing downsizing of workspace from many tenants. Yet, properties located near public transit hubs or in locations convenient for commuters continue to be attractive, and 245 Park Ave. had an occupancy rate of roughly 84% as of the latest reports.
“The formation of this new partnership with Mori Trust reflects the continuing allure of investing in trophy midtown New York assets and the resilience of the Park Avenue corridor as New York’s most desirable office market,” said Harrison Sitomer, chief investment officer at SL Green.
Following the agreement, SL Green retained the services of Kohn Pedersen Fox Associates, which will oversee the repositioning 245 Park Ave. Improvements will include a new podium façade, new windows, and upgrades to the Park Avenue and Lexington Avenue lobbies and plaza.
Looking to relocate? Find your ideal workspace with CommercialCafe.com. Browse the latest office listings in your preferred location and filter results by space type, size or asking price:
