Carlyle Inks Sale of Madison Ave. Tower for $1.3 Bln

Crown Acquisitions and Highgate have agreed to buy the 27-story glass and steel office and retail tower at 650 Madison Avenue from the Carlyle Group for $1.3 billion. Carlyle Realty Partners V, a $3 billion opportunistic U.S. real estate fund, made the investment in 2008.

PRESS RELEASE

NEW YORK–(BUSINESS WIRE)–Noted retail property specialist Crown Acquisitions and Highgate, a fully-integrated real estate investment firm, are under contract with global alternative asset manager The Carlyle Group to acquire the trophy 27-story glass and steel office and retail tower at 650 Madison Avenue for a purchase price of $1.3 billion.

Located in the heart of Midtown’s Plaza District, New York City’s most prestigious and exclusive submarket, 650 Madison is an iconic 600,472 square foot complex.
“650 Madison Avenue is one of the finest properties in all of Manhattan, a trophy in every sense,” said Stanley Chera, founding principal of Crown on behalf of the partnership of Crown and Highgate. “The unmatched location – outstanding for office and retail use – and the superior quality of the asset solidify its position as a trophy for generations to come. We look forward to continuing the trend established by Carlyle of value creation and excellence in ownership.”
Added Haim Chera, principal of Crown, “Carlyle has been successful in acquiring assets with good underlying potential and transforming them into iconic properties, as was the case with the billion-dollar sale last year of the retail condominium at 666 Fifth Avenue, in which we were a partner. Together, 650 Madison Avenue and 666 Fifth Avenue represent two of the best investments of the post-financial crisis era.”
Encompassing the entire westerly block-front on Madison Avenue between 59th and 60th Streets, the Class-A property features three distinct components: a 425,000-sq.ft. Class A office tower; a 100,000-sq.ft. custom medical-office space; and 75,000-sq.ft. of dominant world-class retail, with 200 feet of Madison Avenue frontage. Earlier this year, ownership completed a capital improvement program that created a bespoke lobby, marquis canopy, super-transparent glass curtain wall entrance, and new elevators and common areas all designed by Moed de Armas & Shannon Architects.
Carlyle has completed more than 400,000 sq.ft. of leases at 650 Madison Avenue since acquiring the property in 2008. Currently 92% leased, 650 Madison serves as the international corporate headquarters for Polo Ralph Lauren Corp., which leases 276,829 square feet of the space, and has major retail tenants including Crate & Barrel and luxury designer Tod’s in its Madison Avenue frontage.
“We are delighted to reach this agreement with Crown and Highgate, two of the smartest real estate owners around, on the sale of 650 Madison Avenue,” said Robert Stuckey, Carlyle managing director and head of U.S. real estate. “This is a great outcome for our investors and validates our opportunistic approach.”
Added Carlyle Managing Director Andrew Chung, “We had a strong conviction in the underlying value of this property when we acquired it during the Great Recession, and we are pleased to capitalize on the success of our active repositioning and leasing plan.”
Originally designed by prominent architecture firm Harrison & Abramovitz in 1957, 650 Madison Avenue is one block east of Central Park and adjacent to the GM Building. It was initially built as a ten-story, corporate headquarters for the C.I.T Corporation. The office tower in its current form was designed by Fox & Fowle and redeveloped by Hiro Real Estate in 1987, adding 17 floors atop the existing structure and boasting panoramic views of Central Park. Due to its central location 650 Madison Avenue also enjoys numerous transportation options with direct access to multiple subway lines including the 4, 5 and 6 trains on 60th Street and Lexington Avenue and the N, R on 59th Street and Fifth Avenue.
Adam Spies and Douglas Harmon of Eastdil Secured acted as exclusive broker in this transaction.
Carlyle Realty Partners V, a $3 billion opportunistic U.S. real estate fund, made this investment in 2008.
About Crown Acquisitions
Crown Acquisitions, founded by Stanley Chera, is an investor, owner, operator and developer of primarily retail assets throughout North America. The company’s holdings include interests in properties on the finest retail thoroughfares in New York and nationally, including Fifth Avenue, Broadway, Herald Square, Times Square and Lincoln Road in Miami.
About Highgate
Highgate is a fully integrated real estate investment firm that has acquired more than $7 billion of real estate assets since its inception in 1988. The firm targets investments in a broad range of real estate assets, portfolios, and companies, and has invested in limited and full service hotels, resorts, office, multi-family and mixed-used facilities. Highgate has owned over 80 hotel properties, and has a current portfolio that includes 24,000 owned and managed rooms domestically and abroad.
About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $176 billion of assets under management across 114 funds and 76 fund of funds vehicles as of March 31, 2013. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,400 people in 34 offices across six continents.■Web: www.carlyle.com■Videos: www.youtube.com/onecarlyle■Tweets: www.twitter.com/onecarlyle■Podcasts: www.carlyle.com/about-carlyle/market-commentary