Case Study

1235 Second Avenue

Acquisition Date:November 2002
Disposition Date:October 2012
Asset Type:Block –front retail on evolving Second Avenue corridor
Size: 18,474 SF
Tenants:CVS Corporation
7-Eleven, Inc.
Acquisition Cost:$14.8 million
Equity:$3.7 million
Disposition Value (Total Capitalization):$27.5 million
Gross IRR: 29.6%
Gross Equity Multiple: 4.4x
Strategy
  • Acquire full block-front retail with 200 feet of frontage along Second Avenue
  • Stable income from corporate anchor tenant, upgrade tenancy for remaining spaces
  • Finance conservatively and proactively manage expenses
Execution
  • Replaced low-quality tenants with a mix of strong local service tenants
  • Condominium charges were kept flat for the entire 10-year vesting period
  • Madison refinanced the property in 2006 returning all investor equity and issued regularly-scheduled distributions until disposition in 2012
  • The corner unit on 65th Street was leased to 7-Eleven, Inc. in 2012 at which point the property reached full stabilization
  • Madison coordinated a quiet marketing process which resulted in efficient sale execution at premium pricing to Equity One, Inc., a publicly-traded retail REIT