Citigroup Agrees to Sell
Buildings to SL Green Realty
by David Enrich
From The Wall Street Journal Online
December 05, 2007
NEW YORK -- Citigroup Inc. agreed to sell two downtown Manhattan office buildings to SL Green Realty Corp. for about $1.58 billion, the companies said.
The agreement, which is awaiting approval from Citigroup's board, is the latest in a string of at least a half-dozen building sales by the New York banking giant. Following the transaction, Citigroup, which is New York's largest private employer, will no longer own any office space in Manhattan, according to a person familiar with the matter.
Citigroup will lease back the adjacent buildings, which are home to Citigroup's investment bank, under a 13-year lease that calls for annual rental increases. The properties, located on Greenwich Street in Manhattan's Tribeca neighborhood, have about 2.6 million square feet of office space, SL Green said.
Citigroup has been struggling to rebuild its depleted capital base amid mounting mortgage-related losses and some costly acquisitions. But selling the Greenwich Street properties won't help much. The person familiar with the matter said the company will book profit from the transaction gradually over 13 years, and it won't recognize significant gains in any specific period.
The office buildings are home to nearly 9,000 Citigroup employees. Most of them work in the investment-banking unit, but there also are some wealth-management and back-office employees. Since Citigroup will be leasing the space, its employees won't have to relocate.
SL Green, a New York real-estate investment trust, trumpeted the deal for the "trophy office buildings" as a sign of the company's financial strength amid jittery global markets that have put many deals on hold.
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