Business Management Executive Q&A
Oct 16, 2007
Editor-in-chief Suzann Silverman spoke with Andrew Mathias, who has been SL Green Realty Corp.'s chief investment officer and added the title of president in April, about the fast-growing New York City-area office REIT's investment strategy since closing on the acquisition of Reckson Associates Realty Corp. in January. Here, he addresses plans for the company's suburban portfolio. (See the Oct. 16 edition of CPN to learn about SL Green's plans for New York City.)
CPN: Did the Reckson acquisition launch your strategy for the area surrounding Manhattan?
Mathias: We had done a bunch of investing outside Manhattan previously; we just had not had an operating platform outside of New York City—it was all run from our New York City office. Reckson gave us a platform in White Plains … and a much larger inventory of properties in Westchester and Connecticut. And we intend to employ basically the same strategy we have with SL Green, which is actively buying new opportunities and actively selling buildings and inventory, and we're doing some of both now.
As we speak, we're buying and we're selling. So we'll actively manage that portfolio and try to grow and increase the quality of our properties out there and create a best-of-class operating platform out there like we have in New York.
CPN: How much and how quickly do you want to ramp up your suburban/outer boroughs portfolio and how do you envision that portfolio fitting in with your Manhattan portfolio?
Mathias: There definitely are some synergies where there are Manhattan tenants who are priced out of the market who are looking in the suburbs. We have good entrée to those tenants. We're working with a couple of tenants now in particular who are looking at moving to Westchester and Stamford because they're getting pushed out of Manhattan by the prices. So I think we'll convert some of those tenant opportunities. The growth is really going to depend on the opportunities. We're very disciplined in terms of our investment approach; we don't have a target for size in any of our markets. We really just go according to what opportunities present themselves.
CPN: Do you have an end goal for how big you'd like your suburban portfolio to become?
Mathias: The goal is profitability, not size.
CPN: What are you looking for in suburban acquisitions and are those criteria different in any way than those you use in identifying Manhattan acquisitions?
Mathias: I would say it's similar for the most part. As opposed to Manhattan, which is fairly concentrated, the suburbs are much more spread out. We're certainly looking for properties in our core areas: Greenwich was a midpoint between Stamford and White Plains, (so) we made it a goal to buy an asset in Greenwich and then wound up buying 500 W. Putnam from Mack-Cali. That was a strategic focus, to try to find something with really attractive metrics in Greenwich. We were able to do that. But for the most part it's really where we think we can add value, where we think we may have existing relationships with tenants and where we think we have sellers with whom we can do some of the unique things that we've had such success doing in Manhattan.
CPN: Are there any other areas you're not yet in that you're planning to access or actively seeking properties in?
Mathias: No other areas, really. We try to be a very focused company and try to operate within relatively small areas and try to dominate the areas we operate in.
Editor-in-chief Suzann Silverman spoke with Andrew Mathias, who has been SL Green Realty Corp.'s chief investment officer and added the title of president in April, about the fast-growing New York City-area office REIT's investment strategy since closing on the acquisition of Reckson Associates Realty Corp. in January. Here, he addresses plans for the company's suburban portfolio. (See the Oct. 16 edition of CPN to learn about SL Green's plans for New York City.)CPN: Did the Reckson acquisition launch your strategy for the area surrounding Manhattan?
Mathias: We had done a bunch of investing outside Manhattan previously; we just had not had an operating platform outside of New York City—it was all run from our New York City office. Reckson gave us a platform in White Plains … and a much larger inventory of properties in Westchester and Connecticut. And we intend to employ basically the same strategy we have with SL Green, which is actively buying new opportunities and actively selling buildings and inventory, and we're doing some of both now.
As we speak, we're buying and we're selling. So we'll actively manage that portfolio and try to grow and increase the quality of our properties out there and create a best-of-class operating platform out there like we have in New York.
CPN: How much and how quickly do you want to ramp up your suburban/outer boroughs portfolio and how do you envision that portfolio fitting in with your Manhattan portfolio?
Mathias: There definitely are some synergies where there are Manhattan tenants who are priced out of the market who are looking in the suburbs. We have good entrée to those tenants. We're working with a couple of tenants now in particular who are looking at moving to Westchester and Stamford because they're getting pushed out of Manhattan by the prices. So I think we'll convert some of those tenant opportunities. The growth is really going to depend on the opportunities. We're very disciplined in terms of our investment approach; we don't have a target for size in any of our markets. We really just go according to what opportunities present themselves.
CPN: Do you have an end goal for how big you'd like your suburban portfolio to become?
Mathias: The goal is profitability, not size.
CPN: What are you looking for in suburban acquisitions and are those criteria different in any way than those you use in identifying Manhattan acquisitions?
Mathias: I would say it's similar for the most part. As opposed to Manhattan, which is fairly concentrated, the suburbs are much more spread out. We're certainly looking for properties in our core areas: Greenwich was a midpoint between Stamford and White Plains, (so) we made it a goal to buy an asset in Greenwich and then wound up buying 500 W. Putnam from Mack-Cali. That was a strategic focus, to try to find something with really attractive metrics in Greenwich. We were able to do that. But for the most part it's really where we think we can add value, where we think we may have existing relationships with tenants and where we think we have sellers with whom we can do some of the unique things that we've had such success doing in Manhattan.
CPN: Are there any other areas you're not yet in that you're planning to access or actively seeking properties in?
Mathias: No other areas, really. We try to be a very focused company and try to operate within relatively small areas and try to dominate the areas we operate in.
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