Madison International Realty has increased its stake in New York’s Chrysler East Building to almost 50 percent, after acquiring an additional $10 million of LP equity interests in the office deal.
The private equity real estate secondaries firm said it had purchased the partnership interests – equivalent to an additional 10.4 percent stake in the 32-storey office – from German investors in a Commerzbank closed-ended fund. Madison now owns a 48.9 percent interest in the 42nd Street property, which sits to the east of the Chrysler Building, after investing roughly $55 million of capital.
Madison president and founder Ronald Dickerman told PERE the firm was eyeing LP equity interests in core joint venture projects where institutional investors were looking to exit the transaction or where preferred equity capital was needed.
The valuation environment is no longer the draconian environment that existed in 2008 and 2009 and so more investors are interested in selling. Madison International president
and founder Ronald Dickerman
The valuation environment is no longer the draconian environment that existed in 2008 and 2009 and so more investors are interested in selling.
Madison International president
“We are having a busier fourth quarter than we’ve ever had,” Dickerman explained, adding: “The valuation environment is no longer the draconian environment that existed in 2008 and 2009 and so more investors are interested in selling.”
Madison International said it only eyed passive interests in JVs, where the firm could buy out original investors or inject capital to repair the balance sheet.
In the Chrysler East Building deal, Madison bought out some of the LP interests from a $107 million Commerzbank fund, which closed in 2002, because of investor “fatigue”. The Commerzbank fund had originally bought an 80 percent interest in the office building in September 2002 from Tishman Speyer, with Tishman retaining a minority stake. According to real estate data provider, Real Capital Analytics, the 2002 deal valued the property at $290 million.
Dickerman declined to comment on financial details but said fractional interests in commercial real estate should have some “discounted valuation”.