SL Green Realty Corp., Manhattan's biggest office-building owner, is selling about half its stake in an office tower at 485 Lexington Ave. in a deal that values the property at roughly $504.2 million.

A joint venture between Optibase Ltd. of Herzliya, Israel, and Gilmor USA LLC is to buy a stake of 49.5% in the 921,000-square-foot tower near Grand Central Terminal, SL Green said Monday. The venture would pay $40.8 million for the stake, including a $20 million loan to SL Green.

The deal should be "a real wake-up call" for investors who may have been expecting further declines in Manhattan office prices, said Dan Fasulo, managing director of Real Capital Analytics.

More than half of the building is leased by Citigroup Inc. and Travelers Indemnity Co., according to Optibase. SL Green said the agreement values the property at $547 a square foot.

"The fact remains that significant demand exists for well-leased, well-located Manhattan property," said Fasulo, whose firm tracks commercial property sales.

"There is only a finite amount of supply available at current market pricing."

The venture's loan to SL Green, which bought the building in 2004, is secured by a pledge for an additional 49.5% of the property, according to Optibase. The venture would also assume $450 million of debt on the property, subject to the lender's approval, Optibase said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.