Paramount/Colony Capital JV Buys Queens Trophy Tower For Estimated $475M

Fully leased to Citigroup, the 1.4 million-square-foot, 50-story One Court Square is the tallest building in New York City outside of Manhattan.

New York City’s tallest building outside of Manhattan, the 1.4 million-square foot Queens trophy tower known as the Citigroup building, is coming under new ownership.  Paramount Group Inc. and Colony Capital L.LC.  are buying the property for about $475 million, sources  familiar with the transaction said Wednesday.

A report by Lois Weiss in today’s New York Post indicated that the deal was scheduled to close on Wednesday, although it could not immediately be confirmed that the Paramount/Colony joint venture had completed the acquisition from SL Green Realty Corp. and its investment partner, JPMorgan Chase & Co. If a closing occurred Wednesday, or is imminent, it would reflect a rather lengthy gestation period for the sale; SL Green first disclosed that the deal was under contract last November.  The REIT estimated at the time that it would earn about $42.8 million in proceeds from the sale.

Formally called One Court Square, the 50-story office building designed by Skidmore, Owings & Merrill has dominates the skyline of Long Island City, a section of Queens located directly across from Manhattan.  SL Green acquired the building in 2007 as part of its $6 billion acquisition of Reckson Associates Realty Corp. and its 9 million-square-foot office portfolio.  The building is fully leased to Citigroup, which sold the asset to Reckson in 2005 for a reported $470 million.

In a statement Wednesday afternoon, Cushman & Wakefield Inc. said that had arranged preferred equity for Paramount and Colony. “The investment features a bond-like income stream, along with a going-in basis well below replacement cost,” said Helen Hwang, an executive vice president in Cushman & Wakefield’s capital markets group.