SL Green loan said unlikely hurt by office loan

NEW YORK, March 5 Fri Mar 5, 2010 6:55pm EST

NEW YORK, March 5 (Reuters) - SL Green Realty Corp's (SLG.N) loan on the retail portion of a Fifth Avenue skyscraper will unlikely be hurt after the building's owner requested that its $1.22 billion loan on the office part of the building be modified, according to UBS analysts.

After the real estate journal The Real Deal reported that Kushner Cos have requested that its loan be transferred to special servicing, UBS said that SL Green's loan on the retail portion of 666 Fifth Avenue is unlikely to be affected.

Kushner bought the building in January 2007 for $1.8 billion and in July 2008 sold a 49 percent stake in the retail portion of the building to Carlyle and Crown Acquisitions for $525 million.

Carlyle's financed its purchase with $460 million in debt, including a $135 million junior loan from SL Green. The loan had a book value of $104 million at the end of 2009, UBS said.

Kushner is seeking to transfer the loan secured only by the office part of the building.

A special servicer oversees troubled loans that have been securitized into commercial mortgage-backed securities (CMBS).

SL Green, one of the largest Manhattan office landlords also acts as a lender to other real estate owners. Shares of SL Green, a real estate investment trust, closed up 4.9 percent percent at $55.40, outperforming the benchmark MSCI U.S. REIT Index .RMZ which rose 2.7 percent.

According to the Real Deal article, Kushner Cos has asked to transfer the loan on the office as a proactive measure. The loan is not in default and does not mature until Feb 2017. But the property is only generating 0.6 times its monthly debt service and two large tenants -- Citibank and Orrick-- are either leaving or are expected to leave shortly. (Reporting by Ilaina Jonas; Editing by Tim Dobbyn)

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