OC investors in $200M land deal on Madison Avenue
East-West Bank took keys back, sold to Golden Titan in Irvine shortly after private equity firm got ground-lease
A private equity firm tied to a wealthy Chinese investor with a U.S. base of operations in Orange County has consolidated its ownership of a struggling property on New York City’s Madison Avenue with a $200 million land deal.
Titan Golden Capital, which late last year picked up the ground lease on the distressed office building at 645 Madison Avenue for $26.6 million, has now purchased the ground underneath the tower, The Real Deal has learned.
The Irvine based fund paid $201 million to buy the property from a joint venture that includes Richard Baker, CEO of Saks Fifth Avenue owner Hudson’s Bay Company.
The purchase gives Titan Golden full ownership of the 22-story building — located a block from Central Park at the corner of Madison Avenue and East 60th Street — which had struggled in part due to its pricey rents.
After falling behind on their $50 million mortgage, previous owners Friedland Properties and Nightingale Properties handed the keys to the building back to Los Angeles-based lender East West Bank, in September rather than going through foreclosure.
The Friedland family had teamed up with Elie Schwartz and Simon Singer’s Nightingale to buy the ground lease on the roughly 160,000-square-foot office and retail building in 2015. At the time, the city’s retail market, including Madison Avenue’s “Gold Coast” from East 57th to East 72nd streets, seemed like it could only go up. But the retail bubble burst and rents never returned to their dizzying heights.
Adding to the troubles, the ground lease with Baker’s investment group recently jumped due to a rent reset, according to a person familiar with the matter. When East West Bank took back the property, it found itself facing the same financial predicament that hindered its borrowers.
Within weeks, the bank sold the lease to Titan Golden, which one source said is a client of the bank, which counts the Chinese-American community in Southern California as a core customer base. The nearly $27 million the private equity firm paid for the lease was a significant drop from the $76 million that Friedland and Nightingale paid when they acquired the property in 2015 from TF Cornerstone and Pershing Square Capital Management’s Bill Ackman.
Titan Golden decided it was better to own the property outright and struck a deal to buy the ground from Baker in a transaction negotiated by Marcus & Millichap’s Eric Anton and Nelson Lee.
Representatives for Titan Golden and Baker’s ownership group could not be immediately reached for comment. A representative for the brokers declined to comment.
Titan Golden is tied to investors Chi Fai Ben Wong and Hao Tang, who recently bought a French Normandy-style mansion in Los Angeles from billionaire leveraged-buyout specialist Alec Gores for $70 million.