Joint Venture Formed In Acquisition of 340 Madison Avenue

U.S. Republic Core Fund, an affiliate of USAA Real Estate Company, RXR Realty and Broadway Partners today announced the recapitalization of 340 Madison Avenue, an approximately 750,000-square-foot Class A office building located in Midtown Manhattan’s Grand Central submarket.

The USAA affiliate is joining existing owners RXR and Broadway in a new joint venture and the three parties will share control of the asset. RXR Realty will continue to provide property management services.

As part of the recapitalization, the joint venture has obtained new 12-year first mortgage financing from Cornerstone Real Estate Advisers LLC.

340 Madison is 92 percent leased to a strong roster of tenants, including McDermott Will & Emery, SunGard, National Financial Partners, The U.S. Department of the Treasury’s Office of the Comptroller of the Currency, PNC Financial Services Group and Massachusetts Mutual Life Insurance Company. Allen-Edmonds Shoes, Alden Shoes, Coach, PNC Bank, Starbucks, Van Laack and Verizon Wireless occupy ground-level retail space, including full block frontage on Madison Avenue.

“Having evaluated this opportunity since the property was marketed in 2010, USAA Real Estate Company is pleased to have formed with RXR Realty and Broadway Partners a co-investment joint venture to fully recapitalize 340 Madison with a debt structure at attractive terms,” says Pat Duncan, Chairman and CEO of USAA Real Estate Company. “Strong, long term anchor tenancy and an enduring location will continue to enhance the property’s value. I congratulate RXR and Broadway Partners for working diligently over the past year with USAA and the previous and current lenders to structure this investment.”

”We are pleased to have, in partnership with Broadway, successfully completed our planned recapitalization of 340 Madison Avenue and have the opportunity to invest additional capital alongside USAA to facilitate the de-leveraging of the property to an appropriate level for a core asset of this quality.” said Scott Rechler, Chairman and CEO of RXR Realty.

Broadway CEO Scott Lawlor said, “340 Madison is an excellent property in one of the nation’s best office submarkets. We chose to remain invested in this asset on behalf of our investors through the recent market downturn because we firmly believed in its long-term value. As the market continues its current recovery, we look forward to working with RXR and now with USAA to realize strong returns.”


Published: December 12, 2011
Filed Under: Acquisition

The RXR operating platform manages 73 commercial real estate properties and investments with an aggregate gross asset value of approximately $17.9 billion, comprising approximately 23.4 million square feet of commercial operating properties and control of development rights for approximately 6,300 multi-family and for sale units in the New York Metropolitan area. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.