Win-Win for SL Green

Monday's announcement that private-equity giant Blackstone Group will pay $20 billion to take over Equity Office Properties (EOP) gave a boost to all office REITs.

But the news might be the best of all for SL Green(SLG).

SL Green, a pure-play owner of New York City office space, has found itself in a bit of a pickle. Over the summer the company agreed to purchase most of the New York office assets of Reckson Associates(RA) to expand its foothold in Manhattan, which is enjoying tremendous rent growth.

Last week, however, financier Carl Icahn and real estate firm Macklowe Properties, a key competitor of SL Green's, swooped in with a higher bid of $49 a share for Reckson.

Analysts had scratched their heads as to whether SL Green could possibly justify a higher price than the $45 a share it offered.

The Equity Office deal, however, could help SL Green out of its Reckson jam.

SL Green's stock surged 6.1% Monday after the Equity Office deal was announced and was up another 4% Tuesday to $139.22. With the stock now trading at an all-time high, SL Green has more valuable currency to justify a higher bid for Reckson if it chooses to do so. Whereas Icahn and Macklowe are offering all cash, SL Green is offering a combination of cash and stock.