The Real Deal New York

HIG Realty, Morgenstern Capital buying Madison Park Tower for $80M

CIM Group in contract to sell former illegal hotel in Murray Hill
By Mark Maurer | July 11, 2017 05:05PM

From left: Madison Park Tower at 49 East 34th Street, CIM’s Shaul Kuba (credit: Getty Images) and Robert Morgenstern

H.I.G. Realty Partners and Robert Morgenstern’s Morgenstern Capital are in contract to buy a 36-story luxury rental building in Murray Hill known as Madison Park Tower for $80 million, sources told The Real Deal.

The seller, CIM Group, has owned the 110-unit, 80,000-square-foot tower at 47 East 34th Street, between Madison and Park avenues, since 2011.

CIM hired Cushman & Wakefield earlier this year to market the building for sale as a potential conversion to condominiums or extended-stay housing. The deal is slated to close in the next two months, sources said.

H.I.G. and Morgenstern’s plans for the property were not immediately clear.

Madison Park Tower has a checkered past. Esplanade Capital developed the building as an extended-stay hotel in 2009. In 2010, the lender on the property, iStar, sued the firm for allegedly defaulting on $76 million in loans.

CIM, the Los Angeles-based co-developer of the Midtown supertall 432 Park, acquired the building in a 2011 foreclosure auction for $54 million. Temporary-housing provider BridgeStreet leased the building until 2015, when CIM converted it into a rent-regulated rental. The New York state Attorney General’s office subsequently found that CIM was illegally operating the property as a hotel despite receiving 421a tax breaks. In 2016, CIM agreed to a settlement with the AG in which the developer would pay $4.4 million.

Morgenstern declined to comment, and H.I.G. Realty and Cushman could not be reached.

Cushman & Wakefield’s Adam Spies, Doug Harmon, Adam Doneger, Kevin Donner and Marcella Fasulo are representing CIM in the deal.

Robert Morgernstern, formerly of Stone Street Properties, previously partnered with Los Angeles-based H.I.G. Realty Advisors on a 16-building multifamily portfolio in Manhattan and Brooklyn, which they sold to Kushner Companies for $131.5 million in 2015.

H.I.G. recently raised $593 million for a fund focused on value-add real estate deals in the U.S. The firm, led by Sami Mnaymneh and Tony Tamer, bought the Garland Center in Los Angeles for $210 million with partners last year.

Further east on 34th Street, LeFrak Organization recently bought the Affinia-branded Dumont hotel at 150 East 34th Street for $118 million, where he is planning a rental building. Also, the developers of a 23-story rental building at 237 East 34th Street are looking to sell it for $118 million.