USAA Real Estate Company, the real estate arm of financial services firm USAA, is teaming up again with Madison Realty Capital as an equity partner on a New York City mixed-use building purchase, the firms said Monday.
Madison, a New York-based private equity real estate firm, entered into contract for a 17-story building known as The Buchanan at the end of 2015, then subsequently formed a joint venture with USAA Real Estate to buy the building, located at 160 East 48th Street, for $270 million, according to real estate data provider Real Capital Analytics. USAA Real Estate has about $15 billion in assets under management (AUM), according to its website, and Madison has more than $2 billion in AUM, according to a spokesman.
The Buchanan is the second joint venture for the firms. In December 2014, the partners bought four properties in Brooklyn for $31 million to construct a residential and retail building at 555 Waverly Avenue, according to an earlier announcement. As part of that venture, the firms also are building a 190-unit, 170,000 square foot property on a site that previously housed a bagel factory, according to Madison’s website.
In the latest partnership, the joint venture will be the first new owners of The Buchanan in 64 years. The building, which previously was owned by Harrison, New York-based Rao & Rao, comprises 289 apartments and approximately 16,000 square feet of fully-occupied retail and office space. Madison plans to spend about $41 million to buy out 51 of the 73 rent-stabilized tenants and convert the 2,500 square foot office space to retail, according to media reports.
“This was a rare chance to acquire a full-block asset exhibiting predominantly core characteristics while providing significant value-add potential,” said Josh Zegen, Madison’s co-founder, in a statement Monday. “We are very familiar with this neighborhood and are looking forward to successfully executing our business plan, which is very similar to what we’ve accomplished a few blocks away at 361 East 50th Street.”
Madison bought 361 East 50th Street, a six-story, mixed-use building in July 2014 in an off-market transaction for $40.2 million, according to a statement at the time. The firm has since turned several apartments into luxury units, according to its website.