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Malkin-led investment group buys Westchester office property.

Peter L. Malkin and Anthony F. Malkin led a limited partnership that has purchased 500 Mamaroneck Avenue, a five-story, 285,000 square-foot multi-tenant office building in Harrison, NY along the busy 1287 East submarket. This is the second major acquisition in the Westchester County office market for the prominent real estate family.

The investment partnership paid just over $30 million for 500 Mamaroneck, and Malkin affiliate W&M Properties will supervise investment of an additional $12 million in a comprehensive upgrading and new amenities program during the next two years.

In 1996, another Malkin-led investment partnership purchased and performed a similar upgrade program at the nearby 120,000 square-foot 711 Westchester Avenue, one of the county's major turnaround successes of the decade. That building was empty when acquired and was fully leased to 18 tenants within 18 months.

Across the state line in Fairfield County, CT, Malkin partnerships and W&M Properties successfully executed similar turnaround strategies, most notably at Merritt-View Plaza in Norwalk and Darien Green in Darien. With the 500 Mamaroneck acquisition, the Malkins' Westchester-Fairfield office property portfolio exceeds 1.2 million square feet.

"Our plans for 500 Mamaroneck are consistent with the proven formula we have applied around the country for the past 10 years," said Anthony Malkin, president of W&M Properties. "Superbly located Class A property leases well in the face of strong multi-tenant demand, a full upgrade, generous tenant installation allowances, and 100 percent commissions paid on lease signing."

Jeffrey H. Newman, W&M Properties' senior vice president in charge of the Westchester/Fairfield office portfolio, notes that 500 Mamaroneck's many advantages include its suitability for smaller tenants. "Most prospects in the county require 10,000 square feet or less," he said. "Yet most Westchester office vacancy does not sub-divide well. 500 Mamaroneck easily accommodates tenants as small as 1,800 square feet. We intend to create the preeminent Class A multi-tenant office building in Westchester County's strongest submarket. Common area lobbies, corridors, elevator cabs and bathrooms will be completely renovated. A new tenants-only multi-media conference facility, a state-of-the-art tenants-only fitness center with locker room facilities, an upgraded and expanded dining facility, new and improved external and internal signage, and enhanced landscaping are all part of the program."

Supplementing W&M's rehabilitation and upgrading of the property, 500 Mamaroneck will provide the only 24-hour concierge service and security in the Westchester East marketplace, and a tenants-only shuttle service to and from the Mamaroneck Metro North train station, Newman said.

George S. Perry, W&M vice president for acquisitions, explains that the upside potential of 500 Mamaroneck is augmented by the fact that the building is being acquired for 55 percent of replacement cost. "Moreover, during the next two years, a number of significantly below market leases, representing more than 60 percent of the building's space, will be rolling over," he said.

Anthony Malkin observed that uninterrupted access to capital was a key factor in this transaction, as it has been for acquisitions by other Malkin-ted partnerships. "Two previous investors went to contract on 500 Mamaroneck at higher prices, but could not close," he said. "Our access to private equity, our aversion to high leverage, and our track record of performance give sellers and lenders a comfort level that allows us to acquire properties that others fail to close."

Currently, 20 percent of the building is available for immediate lease and occupancy, with another 120,000 square feet becoming available for lease and occupancy in September.

"We'll begin by immediately raising 500 Mamaroneck up to W&M's high standards," said JoAnn B. McGrath, W&M's director of marketing. "We will provide our typical full turn-key deal-making and management services at this property, including marketing, lease negotiations, design, construction, management and cleaning services, all performed in-house. And, as always, we pay 100 percent commissions to brokers on lease signing."

The property at 500 Mamaroneck Avenue sits prominently on a 34-acre site with spectacular woodland view, landscaped areas, and a dramatic waterfall and pond.
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Title Annotation:real estate managers Peter L. Malkin and Anthony F. Malkin
Publication:Real Estate Weekly
Date:Jun 9, 1999
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