SL Green Agrees To Buy Rival Reckson for $4B

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SL Green Realty Corp., the largest owner of New York City office buildings, agreed to buy Reckson Associates Realty Corp. for $4 billion in cash and stock, expanding its holdings in the city by a third.

SL Green, based in New York, also agreed to sell some properties to a group led by Reckson’s chief executive officer, Scott Rechler, and Marathon Asset Management for $2.1 billion. In the Reckson purchase, SL Green will assume about $2 billion of debt from the Melville, New York-based company. SL Green’s New York City holdings will grow by 32% to 24.5 million square feet.

“It looks like a pretty good deal for SL Green,” said James Corl, chief investment officer for real estate securities at New York-based Cohen & Steers Inc., Reckson’s largest shareholder. “There’s almost an inherent curse in there. If it’s perceived to be too good a deal, it will flush out other bidders.”

American real estate investment trusts are focusing on markets with the highest growth, such as New York, as an industry consolidation accelerates. Brookfield Properties Corp. and buyout firm Blackstone Group LP agreed in June to acquire Trizec Properties Inc., which owns five Manhattan office buildings including Midtown’s Grace Building, for $8.9 billion including debt, the second-largest takeover of a REIT.

“These additions to our portfolio reinforce our already dominant position in the Manhattan marketplace,”SL Green’s chief executive officer, Marc Holliday, said in a conference call with analysts and investors. “Nothing is as compelling to us as well- located and well-positioned Manhattan office properties.”

SL Green, the owner of the Graybar building in Midtown Manhattan, will buy all of Reckson’s shares for $31.68 each in cash and 0.10387 shares of SL Green common stock for each Reckson share and operating partnership unit. Reckson shareholders will own about 15.2% of SL Green after the sale is completed.


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