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SL Green's One Vanderbilt in Legal Tussle over Air Rights

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SL Green Realty Corp. 's SLG New York City-based project - One Vanderbilt - is in the spotlight. This is because the owner of the nearby Grand Central Terminal has sued the New York City and developer SL Green over air rights.

The owner of Grand Central Terminal - Andrew Penson - has alleged that Mayor Bill de Blasio, the City Council and developer SL Green have deprived him of air rights by allowing the developer to build a giant office tower without acquiring air rights from him.

According to Bloomberg news, Penson claimed $1.13 billion from the city and $475 million from SL Green, citing a lawsuit filed in Manhattan federal court.

Notably, SL Green had struck a deal with the City in May for the 1.6 million-square-foot tower permission, which would be taller than the Empire State Building. As part of the deal, zoning changes in the nearby area were also permitted but SL Green had to agree to an investment of $220 million in transit upgrades in the region.

Grand Central Terminal, having been declared a landmark way back in 1967, is entitled to valuable "transferable development rights" or "air rights." These rights can be sold to real estates, which will allow them to exceed permissible heights under local zoning laws.

Penson accused that the move made his air rights "unsellable and therefore worthless." Moreover, per the complaint, the move dishonored the Fifth Amendment of the U.S. Constitution by "taking the property of a private citizen for the benefit of another private citizen without any public purpose."

SL Green however retaliated that the One Vanderbilt project was given the nod by several community leaders and elected officials, who were encouraged by the company's commitment on improving public transit.

In recent times, the company has been in the news for the $2.285 billion acquisition of Eleven Madison Avenue that would enhance its portfolio. The company also has to dispose of assets for funding the purchase. Importantly, Eleven Madison Avenue is already well-leased for the long term and positioned in one of the strongest commercial office submarkets in the city. This offers SL Green ample growth prospects.

SL Green currently has a Zacks Rank #3 (Hold). Stocks worth considering in the real estate operations sector are Prologis, Inc. PLD , PS Business Parks Inc. PSB and Public Storage PSA . All these stocks have a Zacks Rank #2 (Buy).

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PROLOGIS INC (PLD): Free Stock Analysis Report

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PS BUSINESS PKS (PSB): Free Stock Analysis Report

SL GREEN REALTY (SLG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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