Majority Interest in 515 Madison Avenue Sells
New York, NY (January 12, 2010)
Represented by the Capital Transactions Group of international commercial real estate services firm Studley, the Malloy and Sheffer families have sold a majority interest of their fee and senior leasehold positions in 515 Madison Avenue, a 340,000-square-foot, 42-story, prewar office building on the northeast corner of 53rd Street and Madison Avenue in the Plaza District. .
The purchaser, a joint venture led by the Gural and Hemmerdinger families, was the controlling party of the previously existing subordinate leaseholds. The transaction values the building at $150 million, or approximately $440 per square foot, and was financed with a loan from Wells Fargo.
“Consolidating the ownership interests made sense to do now,” explained Woody Heller, executive managing director of Studley’s Capital Transaction Group. “The building had been primarily occupied by two tenants, Fragomen and Brennan, Beer, Gorman, which together leased over 100,000 square feet and typically leased whatever space became available. As a result, the building maintained a low profile in the leasing community. Within the last two years, both tenants outgrew the building, which resulted in the property having sufficient vacancy to warrant upgrading and repositioning. However, the renovation could not be justified given the short duration that remained on the existing leasehold. Therefore, it made sense to consider consolidating the ownership interests, which eventually led to the deal just completed.”
“Now under fee-simple ownership,” added Mr. Heller, “515 Madison Avenue is positioned in a manner commensurate with its famous address, prestigious location and distinguished provenance.”
Jeffrey Gural, senior partner of the new venture that owns and operates the building added, “In anticipation of the closing, we recently renovated the entryway and lobby, as well as created above-standard pre-builts in the available spaces, which has resulted in strong tenant demand. We have leased almost 100,000 feet over the last 12 months and are now 96% occupied. We extended the lobby 40 feet and renovated the decorative ceiling to match the original design from when it was built in 1932; we even found marble from the original quarry. It was the first building my father ever operated, and it will also be the first of our buildings to receive LEED certification. Now that we control the building subject to fee simple ownership, we will continue renovating and improving it to make 515 one of the jewels of our nine million-square-foot portfolio.”
Timon Malloy, president of Fred F. French, commented, “We are delighted to have completed this transaction and to have achieved our objectives—to monetize the majority of our investment, and with the balance, to become partners with the Hemmerdingers and Gurals, who are excellent owners and operators.”
Steve Horowitz Esq. of Cleary Gottlieb Steen & Hamilton LLP represented the Malloy and Sheffer families, while Andy Albstein Esq. of Goldberg Weprin Finkel Goldstein LLP represented the Gural family. Christine A. McGuinness Esq. of Schiff Hardin LLP represented the Hemmerdinger family.
Founded in 1954, Studley has 19 offices nationwide and an international presence through its London office and AOS Studley throughout Europe. Studley provides strategic real estate consulting services, such as lease negotiations, investment sales, note sales, supply-chain management, corporate services and retail leasing to top-tier corporations, financial institutions, law firms, nonprofits, government agencies, investors, retailers and institutions of higher education. Information about Studley is available at www.studley.com.