The Real Deal New York

Madison Realty Capital seeks equity partner to close $270M Midtown deal

$100M sought for purchase, repositioning of the Buchanan

December 01, 2015 06:15PM
By Mark Maurer Twitter_logo_blue copy

Buchanan NYC

160 East 48th Street (inset: Josh Zegen, courtesy of Chance Yeh)

Madison Realty Capital is in contract to acquire a 16-story Midtown East rental building known as the Buchanan for $270 million. But first, the company is seeking a joint-venture partner to cough up nearly $100 million in equity to close on the purchase and renovate the property.

The 297,700-square-foot property at 160 East 48th Street, also known as 760-774 Third Avenue, has 289 apartments as well as retail and office space, according to marketing materials reviewed by The Real Deal. Of the rental units, 198 are market-rate, 73 rent-stabilized and 18 rent-controlled. The property has 139,000 square feet of unused air rights.

In addition to renovations, Madison plans to buy out 51 of the rent-stabilized tenants, convert the 2,500-square-foot office to retail and re-lease the 13,600 square feet of existing retail, the materials show. The closing is scheduled for February.

Madison, a Midtown East-based real estate investment firm led by Josh Zegen and Brian Shatz, aims to hold the Buchanan for five years. They are looking for a partner to contribute 90 percent of the required equity.

Madison reckons the repositioning and financing costs will run about $41 million, the documents show.

Harrison, N.Y.-based Rao & Rao LLC, a company affiliated with the estate of real estate investor Bernard Kayden, has owned the property since 1959. The Leona M. and Harry B. Charitable Trust, long run by legendary landlord Harry Helmsley and then by his widow Leona Helmsley, sold its 32 percent fee interest in the property to Rao & Rao for $41.6 million in 2009.

A JLL team led by Aaron Appel, Mark Fisher and Jonathan Schwartz are marketing the stake. They declined to comment.

Representatives for Madison didn’t respond to requests for comment by press time. The firm is one of the city’s biggest mid-market players, having closed about $900 million worth of deals in 2014.

Adam Pincus contributed reporting.