Challenge: The NYCM team was retained by a foreign-based Saudi family, Olayan Group, and their joint venture partner, Chelsfield, to assist in identifying and acquiring a trophy office building in the Plaza District. The group was interested in purchasing an iconic asset with large floorplates because they had tenants interested in leasing space at a Plaza District location.
Strategy: The NYCM team presented several potential opportunities and the client ultimately selected 550 Madison Avenue, a 37-story, 850,000-square-foot building located between East 55th and East 56th Streets. However, 550 Madison Avenue was not on the market for sale. It had been purchased in 2013 by a partnership led by The Chetrit Group, which intended to convert it to a luxury hotel at the base and residential condominiums
in the tower.
The partners were still searching for a new $1.4 billion loan that would pay off the lenders for the acquisition as well as pay for the condo-hotel conversion. However, there were signs of a slowdown in demand for ultraluxury residential product and financing was difficult to secure as lenders were uncertain about the depth of the super-luxury market and concerned about oversupply. Due to this unstable environment, the NYCM team viewed 550 Madison as a viable acquisition target.
Result: In April of 2016, Chetrit discarded its plans for a 96-unit condominium conversion and 170-key hotel and instead sold the Property to Olayan Group and Chelsfield for $1.4 billion, the fourth largest investment sale transaction in Manhattan in 2016.