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During the last downturn in the real estate market, Stephen Green lost only one piece of property to lenders, an office building in Hempstead, L.I., that was the farthest afield the Manhattan-based investor had ventured.
The experience taught the chairman and chief executive of SL Green Realty Corp. the virtues of sticking to your knitting.
"We found we were not very special (outside of the city). We were only average," says Mr. Green, sitting in his 16th-floor office, in one of the garment center buildings owned by the firm. "But in the city, no one can compete with us for the product class."
That product class is Class B buildings, the aging but often architecturally significant edifices that dot many of Manhattan's up-and-coming commercial neighborhoods, and which typically are in need of costly renovation.
SL Green, which went public last month, has made a career of buying and resuscitating these buildings, exclusively in Manhattan. The company's portfolio includes 11 Class B properties, comprising just over 3.2 million square feet of space.
The single-minded strategy sets Mr. Green's newly minted real estate investment trust, with its $269 million in assets, apart from its mostly larger competitors, which believe in diversification.
SL Green's strategy is the riskier one. Historically, Class B buildings as a group show greater price declines in a down market than their Class A brethren.
More problematic, SL Green's success may come...