By Chibuike Oguh
NEW YORK (Reuters) – The shares of SL Green Realty Corp surged on Monday after the real estate income trust (REIT) announced that it has sold a nearly 50% stake in one of its New York City office buildings at a $2 billion valuation.
The deal comes amid growing turmoil in the office real estate space, where higher interest rates and the rise of remote working have caused property values to plummet and many developers to default on their debts.
SL Green Realty said it sold the building at 245 Park Avenue, which has 1.8 million-square-foot of office space, to a U.S. affiliate of Japanese real estate developer Mori Trust Co Ltd. It also hired architectural firm Kohn Pedersen Fox Associates to work on the building’s redesign, which would add new windows, lobbies and retail shops.
The company’s stock, which is down 17% year to date, rose as high as 20% after the announcement and is on track for its biggest one-day percentage gain since Nov. 9, 2020.
U.S. real estate stocks real estate stocks have struggled this year amid worries that lenders would begin to tighten credit standards on the sector following a rise in defaults prompted by rising interest rates.
SL Green Realty was the biggest gainer among listed REITs, leading its peers Vornado Realty Trust, Office Properties Income Trust, and Boston Properties Inc. The S&P 1500 Office REIT index, which has fallen nearly 21% this year, was up 6.10%.
(This story has been refiled to correct a typographical error in paragraph 3)
(Reporting by Chibuike Oguh in New York; Editing by Lisa Shumaker)
