07/14/2010

Madison Expands Focus to Distressed Plays

Madison Capital, which for most of the past decade has focused on buying core properties in New York, has formed a unit to target distressed assets in several regions.

The New York firm plans to team up with equity partners to make $300 million of unleveraged investments by the end of next year. It will buy distressed properties and senior and subordinate debt. It will also make preferred-equity investments.

The "special situations strategy unit" will seek a return of about 18%, focusing on office, retail, hotel and multi-family deals in the Boston-to-Washington corridor, South Florida and California. On occasion, Madison will recruit operating partners to assist with workouts.

Heading the effort are managing director David Steinberg and director Christopher Bellapianta. They joined Madison in February after spending about 10 months at FrontView Advisors, which has disbanded. They headed the New York firm with Bret Salzer, who joined SL Green Realty of New York as associate general counsel last month.

Before forming FrontView, Steinberg and Bellapianta worked at Antares Real Estate Services, a Stamford, Conn., investment firm that closed last year. Steinberg was a vice president of acquisitions for two years, and Bellapianta was an associate vice president for one year.

Madison, which was founded in 2002, has acquired 16 properties totaling $900 million. Among its biggest deals was the $86 million purchase of a 46,000-square-foot retail condominium at Manhattan House, at 200 East 66th Street in Manhattan. It bought the condo in 2008 from New York fund shop O'Connor Capital Partners.

That deal was made via a $200 million joint venture that Madison formed in April 2008 with affiliates of Prudential Real Estate Investors. Pru may team up on some deals made by the new Madison unit. Meanwhile, Steinberg and Madison co-founders Richard Wagman and Phillippe Weissberg are approaching a mix of private and institutional investors as potential partners.

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