Madison International Realty, the New York-based private equity real estate firm and part-owner of the iconic Chrysler building, has launched its largest fund ever, PERE has learned. Madison International Real Estate Liquidity Fund V is seeking to raise third-party commitments in the region of $750 million, well above the initial target of its predecessor, Fund IV, which initially targeted $400 million but ended up oversubscribed at $510 million.
Potential limited partners are being approached now that Fund IV is fully invested after a two-and-a-half year period. Placement agents, Forum Asset Management and Mercury Capital Advisors, have been retained for the latest offering, which again is focused on acquiring LP and partial ownership interests in core real estate assets in the US, the UK and Western Europe. Madison declined to comment on its fundraising activities.
Madison is taking advantage of a number of trends precipitating the sale of partial interests. In some cases, property fund managers have been reluctant to sell an asset before rental rate recovery, but underlying investors in the property funds have been looking for a return of capital so they want to sell their interest.
In addition, some fund sponsors have been selling partial interests in their core assets because they need liquidity. Banks are no longer ‘extending and pretending’ and want repayment now, forcing borrowers to sell partial interests in order to repay their lender.
Deals that Madison has executed include a 56.95 percent stake in an office tower in Frankfurt from Morgan Stanley Real Estate in March. Together with its German subsidiary Madison Real Estate, the firm bought the interest in the Trianon complex held by Morgan Stanley’s P2 Value fund, an open-ended property fund for German investors, for a reported €92 million.
The previous March, Madison acquired a 49 percent stake in a portfolio of 15 core retail properties in and around New York City for $178.3 million. The firm also acquired a 50 percent stake in Bridgepoint Marketplace, a 126,000-square-foot shopping centre in Valencia, California, for $9 million, alongside numerous other deals.
Madison, however, is best known for its 48.9 percent stake in the 745,000-square-foot Chrysler East building. In 2008, it bought a 38.5 percent stake for $10 million and increased its stake to 48.9 percent in 2010. In total, it has invested $55 million in the skyscraper, acquiring its ownership interest from a number of German investors that invested through Commerzbank, which held the building in a joint venture with Tishman Speyer.
Madison, which has offices in New York and Frankfurt, opened for business in London in November 2010. The firm is led by president and founder Ronald Dickerman, while Michael Siefert is head of the Germany office and former Lehman Brothers professional Sean Kelly-Rand is based in the London office to source deals from the UK and Irish markets.