55 Railroad Avenue, Greenwich, CT

Location:Greenwich Submarket of Fairfield County, CT
Property Type:Office
Square Footage:131,600 sf
Date Acquired:December 2004
Purchase Price:$97,750,000 ($743 psf)
Strategy:Maintain current occupancy and seek to capture rising rental rates in supply constrained market
Date Sold:June 2007
Sold For:$142,500,000 ($1,082 psf)
Total Investor IRR:In excess of 30%

Project:

In December of 2004, Abbey Road Advisors purchased 55 Railroad Avenue as a joint venture with the Willet Companies and Warren & Partners for a then-record price of $742 per square feet. Abbey Road Advisors was attracted to this investment and willing to pay the price because of the building’s quality construction which was enhanced by $6mm in recent renovations, its premier location immediately adjacent to the Greenwich train station and the strength of the area’s financial service industry which comprised the bulk of the building’s strong tenant roster. The challenge was to capitalize on the anticipated market rent growth and justify the then record acquisition price by meeting investor’s expectations through stable projected returns.

Investment Strategy:

Believing the investment to be a solid core asset, Abbey Road Advisors initially anticipated the term of investment to be a 7 to 10 year hold. As such, the plan was to cultivate solid risk-adverse annual cash returns from the leases in place and long-term capital appreciation from increases in market rents from future renewals. However, part of Abbey Road Advisors’ investment philosophy is to continually monitor market conditions and conduct financial analysis throughout the asset management process to ensure that a market opportunity to outperform expectations is never missed.

Results:

The two years following acquisition saw an unprecedented level of growth in the local financial sector; and as a result Greenwich, CT quickly became ground zero for the rise of the hedge fund. This rise drove market rent growth that exceeded even the most aggressive underwriting of the prior two years. Due to Abbey Road Advisors’ active asset management philosophy, intimate knowledge of the local market and ability to quickly react quickly to un-anticipated market changes, an exit strategy was immediately devised to sell 55 Railroad Avenue years before the originally anticipated disposition schedule. In June of 2007, 55 Railroad Avenue sold for over $1,080 psf which was the single largest suburban office sale of the year. The sale resulted in a total investor return of greater than 30%.