UPDATE 2-Vornado, SL Green in venture for debt on skyscraper
* Companies in joint venture to own building's debt
* Building one of the most expensive in NYC
* Vornado shrs down 2.2 pct, SL Green down 1.2 pct (Adds building details, background, byline)
By Ilaina Jonas
NEW YORK, March 16 (Reuters) - Vornado Realty Trust (VNO.N) and SL Green Realty Corp (SLG.N), two large real estate investment trusts (REITs), said on Wednesday they have formed a joint venture to hold $400 million in debt on one of the most expensive office buildings in Manhattan.
Broadway Partners and Middle East money manager Investcorp paid $1.278 billion in 2007 for the building at 280 Park Avenue. It was the fourth-highest price paid for an office building that year, according to Real Estate Alert.
It consists of a 31-story tower, a 43-story tower and a 14-story connecting building and is 1.237 million square feet.
The owners have struggled with rising vacancies. Deutsche Bank left after its lease on 338,700 square feet expired last month. The National Football League's lease on 205,000 square feet of space is due to expire at the end of February 2012. That could leave the office complex 45 percent empty.
Investment bank EdgeRock Realty Advisors has been representing Broadway Partners in its search for investors.
Broadway and Investcorp financed their purchase with $1.125 billion of debt, including a $440 million senior mortgage. The rest of the debt was sliced into six pieces. Vornado held the most junior piece and SL Green held four pieces. A group owns the remaining debt.
Under the terms of the joint venture, Vornado paid SL Green $111 million and assumed $15 million of SL Green's debt position, Vornado and SL Green said in a statement.
Broadway Partners has encountered problems with other properties. In 2009, it lost the John Hancock Tower, Boston's tallest building, in a foreclosure auction. Broadway had paid about $1.3 billion for the property in 2006. Mortimer Zuckerman's Boston Properties Inc (BXP.N) bought it in 2010 for $930 million.
Vornado closed down 2.2 percent at $85.07 on the New York Stock Exchange. SL Green closed down 1.2 percent at $69.03. The joint venture was announced after the market closed. (Reporting by Ilaina Jonas; Editing by Richard Chang)
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