|Location:||New York, NY (Midtown)|
|Square Feet:||1,401,301 SF|
|Purchase Date:||December 2007|
|Purchase Price:||$1,150,000,000 ($821 PSF)|
BACKGROUND / OPPORTUNITY
In the fourth quarter of 2007, Monday Properties pursued an opportunity to acquire the Helmsley Building, a 1,401,301 square foot beaux-arts style landmark located in the Park Avenue submarket of Midtown Manhattan. Built in 1929 as the luxurious headquarters for the New York Central Railroad, 230 Park Avenue is a 34-story universally recognized iconic asset. The Property strategically straddles Park Avenue at East 46th Street and in offering a direct connection to Grand Central Terminal arguably holds the premier location in the market.
Monday Properties was hired as the managing and leasing agent for 230 Park Avenue by the Bass Family in 1997, concurrent with Bass’ acquisition from the Helmsley Organization. Monday immediately endeavored to institutionalize this iconic asset, focusing its efforts on targeted leasing through a consolidation and assemblage of large block, efficient space for creditworthy end-users. From 1997 through 2005, Monday successfully consolidated 400 spaces into approximately 150 larger blocks, attracting such high-profile credit tenants as ING Investment Management, Swiss Re, Tokio Marine Management and Bear Stearns, in total representing 37% of the Property’s total rent. During that same period, Monday oversaw an extensive $50 million renovation of the building’s façade, elevators, cupola, lobby and building systems.
With Monday’s leasing campaign and capital program successfully complete, the Bass Family sold 230 Park Avenue to Istithmar (Dubai Holdings) in 2005 for $705 million ($503 PSF). Upon its acquisition, Istithmar retained Monday as its managing agent, explicitly averting any proposed capital projects or marketing and leasing campaigns in favor of a market timing ownership strategy.
Monday Properties and Whitehall Real Estate Funds successfully purchased 230 Park Avenue in an off-market joint-venture transaction. Its strong existing relationship as managing agent for the Seller facilitated the $1.15 billion ($821 PSF) acquisition.
At acquisition, 230 Park Avenue was 91% leased at approximately $46.00 PSF, a significant discount to current market rates of $85.00 PSF. The property presented a number of prospective opportunities to enhance revenue through further consolidation and reconfiguration of tenant space, growth of existing major tenants and favorable expiration profile. Furthermore, the opportunity represented a significant discount to replacement cost in an inflationary environment.
Monday’s impressive track record as the managing and leasing agent provides an excellent opportunity to further a business plan that proved to be so successful under prior ownership: growing revenue through operating efficiencies, further consolidation and reconfiguration of tenant space and existing tenant expansion. Ownership fully intends to maintain the building’s iconic status in the marketplace and has budgeted approximately $35 million for capital upgrades to the property, including ongoing building system improvements and prominent public area enhancements scheduled for the next five years. Upon completion, these upgrades will serve to further enhance the attractiveness of the building to large block, credit tenants. Excellent relationships with existing tenants and unparalleled access to the brokerage community will provide opportunities to bring below-market expiring leases current and lease existing vacancy at prime rates.