OPPORTUNITY

Monday Properties acquired 237 Park Avenue in October 2003, after having served as the managing agent since 1999.  The building is a 21-story office tower containing 1,250,000 RSF and is located in the heart of midtown Manhattan’s Grand Central District. Occupying the eastern span of Park Avenue from East 45^th to East 46^th Streets, its large floor plates and adjacency to Grand Central Terminal at 45^th Street has enabled the property to attract and retain an impressive roster of credit tenants, such as Credit Suisse, Bear Stearns, UBS, J. Walter Thompson and International Paper.

Upon acquisition, 237 Park Avenue presented a number of value-add opportunities such as below market in-place rents of $38 PSF and over 40% of the building’s (456,000 RSF) leases expiring in 2006.  Stabilizing the rent roll, combined with a focused deployment of approximately $3 million for elevator replacement with new Schindler Miconic systems, all presented significant upside for ownership.

TRANSACTION

Monday successfully purchased 237 Park Avenue in an off-market transaction due to its strong existing relationship with the seller and its intimate knowledge of the building and leasing market.  This relationship, plus Monday’s ability to move quickly, convinced the seller not to run a public sales process.  In October 2003, a joint-venture between Monday Properties and Citibank Asset Finance purchased the property for $455 million ($363 PSF), a 7.1% cap rate on year 1 NOI of $32 million.  The deal was capitalized with $328 million of senior debt from Greenwich Capital and $164 million of venture equity. At that time, the venture projected a leveraged IRR of 15%.

RESULTS

Monday’s impact as owner of 237 Park Avenue was felt immediately, as it renewed the property’s single largest tenant, J. Walter Thompson, for 270,280 RSF at $44 PSF and leased another 56,177 RSF of surrendered space to UBS at $46 PSF.  With its large block leasing program successfully completed, Monday recapitalized the asset in July 2005 with Beacon Capital Partners.

Shortly after the recapitalization, Monday continued to execute its business plan with a forward renewal and expansion of Jennison Associates for 115,344 RSF at an average rent of $76 PSF.  Furthermore, Monday leased the balance of the vacant space (148,028 RSF) to Bear Stearns at an average rent of $69 PSF. Bear was expanding from its nearby worldwide headquarters 383 Madison Avenue. The tenant was so satisfied with the lease negotiation and the owner’s management style that they indicated a desire to take additional space at 237 Park Avenue, although the building had no immediate availability. Monday then successfully identified and negotiated an early surrender with Credit Suisse, making this 106,950 RSF available to Bear Stearns at an average rent of $81 PSF.

Monday successfully leased over 700,000 RSF in less than three years – a strong testament to Monday’s superior tenant and broker relationships. This overall leasing activity increased NOI over 30% from $32 million at acquisition to $42 million in 2007.  With both a stable tenant roster and a strong investment sales market in-place, the Monday/Beacon venture strategically sold 237 Park Avenue to Broadway Partners for $1.18 billion ($943 PSF) in May 2007.

The Beacon/Monday sale culminated a four year period that earned an overall $681 million net profit and IRR of 55.65%.