The SL Green Realty Corporation chipped off a piece of the vast Helmsley real estate empire Monday night by agreeing to pay $165 million for control of three midtown office towers, including the Graybar Building.
SL Green, a real estate investment trust based in Manhattan, said the purchase agreement covered the acquisition of 1466 Broadway and the long-term leaseholds of 25 West 43d Street and the Graybar Building, at 420 Lexington Avenue, a total of 1.8 million square feet of office space. The company said it expected to invest about $10 million in renovating and upgrading the three properties.
''They're good, solid real estate,'' Stephen L. Green, chairman of SL Green Realty, said. ''You can't get better location than the Graybar Building, on top of Grand Central Terminal. And 1466 Broadway is in the eye of the storm in Times Square, probably the most exciting area in the world today.''
The sale is the latest step taken by Leona Helmsley in dismantling the empire built by her late husband, Harry B. Helmsley, over five decades. She hired Eastdil Realty to organize the sale of the properties, some of which are entangled in a complex web of partnerships.
Mrs. Helmsley recently signed a contract to sell the 1.2 million-square-foot skyscraper at 140 Broadway to Larry Silverstein for $191 million. And over the next two weeks, she is expected to sell her stake in the landmark Flatiron Building, the Harley hotel chain, a package of residential properties, two land parcels, jewelry marts in Miami and Los Angeles, and possibly the New York Helmsley Hotel.
The Helmsley properties sparked intense bidding wars among developers, investment banks and foreign investors as the economy rebounded from a devastating recession in the early 1990's and as the office vacancy rate in midtown fell to 9.1 percent, the lowest point in more than a decade, according to Insignia/Edward S. Gordon Company. Prospective buyers, who are jostling each other over virtually every property that comes on the market, are assuming that the economy will continue to improve and that office rents will rise sharply.
Mr. Green outbid several groups, including one led by Peter Malkin, a longtime partner in various Helmsley properties who recently ended a bitter feud with Mrs. Helmsley. Mr. Malkin had also lost out in the bidding for One Penn Plaza, a 2.4 million-square-foot tower next to Madison Square Garden that is being sold to Vornado Realty Trust for $420 million.
The purchase of the three Helmsley properties brings to 15 the number of properties in the SL Green portfolio. Mr. Green, who took his company public last year, recently paid $58 million for 800,000 square feet of commercial space at 17 Battery Place in lower Manhattan. Rather than chasing expensive trophy properties, Mr. Green has specialized in older commercial buildings in good locations.
