Madison Realty Capital Nabs Midtown Mixed-Use Property

Madison Realty Capital and USAA Real Estate Co. have teamed up to acquire The Buchanan, a well-known mixed-use community that's getting its first new owner in 64 years.
The Buchanan

The Buchanan, 160 E. 48th St., New York

New York—A prominent 16-story apartment community in Midtown Manhattan, known as The Buchanan, now has new owners. Madison Realty Capital (MRC), an institutionally backed real estate private equity firm, recently purchased the property at 160 E. 48th St. in partnership with USAA Real Estate Co. for a reported $270 million.

MRC entered into contact for the property late last year, and was looking for a joint-venture partner to bring $100 million in equity to the table for the purchase and renovation, The Real Deal reported.

This acquisition marks the fourth owner for the 300,000-square-foot, mixed-use property since it was built in 1928, but its the first new owner in the last 64 years. The property includes five interconnected mid-rise towers surrounding a garden courtyard, with 289 units and about 16,000 square feet of retail and office space. Of the units, 198 are market-rate, 73 are rent stabilized and 18 are rent-controlled.  An advantage of the property for the owners is that it also contains about 140,000 square feet of excess air rights.

The Buchanan’s units include a mix of studio, one-, two- and three-bedroom floor plans on the second through 16th floors, with penthouse units at the top offering private outdoor terraces. The retail and office space spanning the 200 feet of frontage on 3rd Avenue and 145 feet along 47th and 48th streets is 100 percent occupied.

The partnership has plans for a makeover of the property, including a capital improvement program with the goal of renovating and reconfiguring existing units, enhancing operating efficiencies and creating high-end amenities for its residents.

According to The Real Deal, MRC also plans to buy out 51 of the rent-stabilized tenants, convert 2,500 square feet of office into retail, and re-lease the 13,600 square feet of existing retail.

“We believe that The Buchanan provides a tremendous value proposition backed by sound fundamentals with sustainable growth. This was a rare chance to acquire a full-block asset exhibiting predominantly core characteristics while providing significant value-add potential,” said Josh Zegen, co-founder & managing principal of MRC. “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 E. 50th St.”

MRC acquired 361 E. 50th St., a six-story mixed-use building in Midtown, for $40.2 million in July 2014.

The Buchanan transaction is the second for the MRC-USAA partnership, the first being its purchase of four parcels of land at Warverly and Atlantic avenues in the Clinton Hill neighborhood of Brooklyn, which it plans to turn into a 141-unit residential community. MRC purchased the property at 551 Waverly for $23.5 million and closed on the three adjacent properties for $7.5 million in December 2014.

CBRE‘s Darcy Stacom, Paul Leibowitz, David Krantz and Carl Shorett represented the seller while the JLL team led by Aaron Appel, Mark Fisher and Jonathan Schwartz marketed the stake on the buyer’s behalf for this transaction.

Image courtesy of MRC