Case Study

655 Fifth Avenue

Acquisition Date:October 2010
DISPOSITION DATE: October 2013
ASSET TYPE: Flagship Retail and Office headquarters building on 5th Avenue and 52nd Street
SiZE: 49,373 SF
Tenants: Salvatore Ferragamo
Acquisition Cost:$115.0 million
Initial Equity:$39.8 million
Disposition Value (Total Capitalization):$310.0 million
Gross IRR:69.6%
Gross Multiple on Equity:4.8x
Strategy
  • Distressed capital structure with path to fee ownership on an irreplaceable asset in the heart of midtown Manhattan
  • Negotiate with mezzanine lender, A & B mortgage note holders and sponsor to take control of asset
  • Capitalize on long-term tenancy with under market lease
  • Excellent retail visibility, street frontage & ceiling heights
Execution
  • Madison closed the transaction in two weeks and structured a new first mortgage and mezzanine financing with Goldman Sachs
  • Analyzed and pitched embedded development opportunity to Ferragamo while proactively managing net lease
  • Madison sold the majority interest in the asset to Vornado in 4Q13 while retaining an ownership position and asset management role