SL Green, Vornado Close Refinancing For Manhattan JV Asset
Zacks Investment Research | May 18, 2016 09:09PM ET
SL Green Realty Corp. (NYSE:SLG) and Vornado Realty Trust (NYSE:VNO) completed the $900 million refinancing of a Manhattan office building, which is held in joint venture by the two real estate investment trusts (REITs).
This refinancing for 280 Park Avenue, a 1,250,000 square feet office asset is aimed at enhancing the financial capacity on favorable terms. This is because the new $900 million loan that carries a three-year term (subject to extension options) and a floating interest rate of LIBOR plus 2.00% (presently 2.44%) has replaced the prior $721 million debt, which had an interest rate of around 6.35%.
Notably, this refinancing occurred on the heels of the closure of a $150 million redesign and renovation of the front and interior of the building. The refurbishment included building-wide infrastructure upgrades, an expansive world-class lobby and measures to boost environmental sustainability along with the redesign of the neighboring plaza. These redevelopment efforts are expected to drive demand for space in the building.
Notably, SL Green is New York City's reputed office landlord and aims at acquisitions, management and maximization of value of Manhattan commercial properties. On the other hand, Vornado is engaged in the ownership, management and development of office and retail assets. Its portfolio is concentrated in two major markets – New York City and Washington, DC.
Currently, both SL Green and Vornado carry a Zacks Rank #3 (Hold). However, investors interested in the REIT industry can consider better-placed stocks like PS Business Parks Inc. (NYSE:PSB) and Whitestone REIT (NYSE:WSR) . Both stocks have a Zacks Rank #2 (Buy).
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