UPDATE 2-SL Green, Vornado become main owner of Park Ave tower

Tue May 17, 2011 6:31pm EDT

* SL Green/Vornado to have "significant" equity stake

* Control to rest in three owners

* Property to get $150 mln makeover (Adds background, details of ownership, byline)

By Ilaina Jonas

NEW YORK, May 17 (Reuters) - SL Green Realty Corp (SLG.N) and Vornado Realty (VNO.N), two of the biggest owners of Manhattan office buildings, have reached an agreement with the owner of a Park Avenue building which will give the real estate investment trusts majority ownership.

After months of negotiations, SL Green and Vornado, who hold almost all of the junior loans on 280 Park Avenue, said on Tuesday that the joint venture they formed in March will be the primary owner of the 1.24 million square foot building near Grand Central Station.

SL Green and Vornado teamed up in a 50-50 joint venture after both tried to gain a position to take over the building if the owner, Broadway Partners, could not keep up with the mortgage payments.

Broadway Partners and Middle East money manager Investcorp paid $1.278 billion in 2007 for 280 Park, making it the fourth-highest price paid for an office building that year, according to Real Estate Alert.

The 1.237 million square foot building consists of a 31-story tower, a 43-story tower and a 14-story connecting building.

The building has 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.

The three parties will invest $150 million to refurbish the building.

The three parties will have control over the property but the SL Green/Vornado joint venture will "hold a significant majority equity stake in the property."

Neither SL Green, Broadway nor Vornado returned phone calls seeking more information. Broadway Partners is injecting more money into the building, although it did not disclose how much.

Investment bank EdgeRock Realty Advisors has been representing Broadway Partners. (Reporting by Ilaina Jonas; Editing by Tim Dobbyn, Phil Berlowitz)