Case Study

350 Madison Avenue

Opportunity
Monday Properties pursued a class A office portfolio in the fourth quarter of 2002 that contained two properties in Manhattan and one property in Detroit. The portfolio included 350 Madison Avenue, a 25-story, 382,671 square foot office building with ground floor retail and strategic location two blocks from Grand Central Terminal. Built in 1922, the property served as the headquarters of Condé Nast from the 1970s to 1999 and provided ownership the opportunity to re-tenant what had historically been a fully leased asset in a favorable environment.
Transaction
Through its strong existing relationship with the Seller, Monday Properties and The Landis Group acquired the portfolio in an off-market transaction from Credit Suite First Boston for an aggregate purchase price of $477.1 million ($293 PSF), with $146.8 million ($384 PSF) allocated to 350 Madison Avenue.
Results
Monday Properties served as the property’s managing agent since 1999 and managing and leasing agent for the 2003-2005 period. Through its period of ownership, it oversaw approximately $30 million of extensive capital renovations, including major operating system and public area upgrades. A leasing campaign that commenced in 1999 with the departure of the sole office tenant, Condé Nast, culminated with a successful re-tenanting to 100% occupancy and limited near term expirations. The property attracted several renowned office tenants (BT North America, Collins Stewart, and Citco Funds), while continuing to maintain its identity as the flagship retail location for Paul Stuart. With a stable tenant roster in-place through 2011 and a strong investment sales market in cycle, the venture sold 350 Madison Avenue in February 2005 at a sale price of $194.5 million ($508 PSF). The proceeds resulting from this transaction and a simultaneous refinancing of 1440 Broadway (the other Manhattan property in the portfolio) were combined and applied towards a full repayment of the initial financing. The overall portfolio transaction generated a net profit of $160 million and 42.41% IRR for the Monday/Landis joint venture. Through its exceptional track record with the asset and strong relationship with the purchaser, Kensico Properties, Monday Properties was able to continue as managing and leasing agent for the property for over 2 years following the sale.
Location
New York, NY
Property Type
Commercial
Square Footage
382,671 SF
Purchase Date
December 2002

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