Recapitalizing a premium real estate asset to form a powerful joint venture
Our equity advisory experts structured a partnership between a corporate real estate owner and a real estate advisory firm to finance the management of a Class A office building
The ambition
Mutual of America, one of the largest retirement providers for employers in the U.S., was the sole owner of 320 Park Avenue, a 760,000-square foot Class A office building in midtown Manhattan. The company’s headquarters are based in 25% of this centrally located building, which is also home to many high-profile office and retail tenants.
With its superior amenities and the premium rents it commands, 320 Park Avenue is a highly desirable space and a recent $35 million refurbishment had added further value.
However, managing such a huge asset requires high levels of time and resources. The company sought JLL’s advice on restructuring the debt and equity in this asset in order to access capital and potentially tap the expertise of a financial partner.
The strategy
The building is in an area of Manhattan with a 4.25%-year-one stabilized cap rate, the lowest multi-tenant office cap rate in New York City over the past four years and through the Covid-19 pandemic.
With the JLL team valuing the space that Mutual of America occupies at $750 million ($978 per sq ft), the low cap rate showcased the high value of 320 Park Avenue, opening the door to extremely favorable deals with high-profile firms.
This is a powerful partnership that will create significant synergies related to 320 Park Avenue, a market-leading asset that is uniquely positioned to support tenants through a dynamic environment and superior amenities.
Leveraging its expertise in equity advisory, recapitalization and real estate markets, the JLL team positioned 320 Park Avenue as a market-leading premium asset in order to match the company with a financial partner whose business goals would align with those of Mutual of America.
The results
JLL secured a joint venture with the German multinational insurance company Munich Re, which now provides Mutual of America with advisory management services through its wholly-owned subsidiary, MEAG.
The team recapitalised Mutual of America’s assets to allocate a 25% minority ownership interest to Munich Re in the 320 Park Avenue building, ensuring resources for the long-term success of the property as well as widening MEAG’s presence in the U.S. real estate market.
By setting up a powerful, cross-continent partnership that creates significant business synergy between a real estate owner and real estate advisory firm, the JLL team propelled a premium asset to the top of its market and ensured it would continue to attract and retain tenants with a dynamic, well-appointed environment, backed by robust financing.
