Landmark on the Lake

The transaction, which is scheduled to close in late October, marks the culmination of another extraordinary "turnaround" success story for Wien & Malkin investors. The sale price is $56 million, which is approximately $30 million more than the acquisition cost.

"Applying our standard 'sell-versus-hold' decision-making criteria, we determined that the value to be realized now compared favorably with total returns projected for the coming years," says Anthony E. Malkin, President of W&M Properties.

Landmark's new owner will be a Chicago-based firm that builds and converts multi-family properties in the Midwest. The firm has indicated its intention to convert the 28-story, 275-unit residence to capitalize on the strong demand for condos in and around downtown.

"Milwaukee was considered an 'old economy' city in the late 1990s, very much out of favor for real estate investment," recalls George S. Perry, W&M's Senior Vice President and Director of Investments. "We saw a chance to acquire a luxury residence commanding great views of both Lake Michigan and the city, only minutes from a downtown that was being revitalized. The fact that it wasn't trendy made it all the more appealing as a high-value acquisition."

Mr. Malkin says the due diligence process that led up to the original decision to buy Landmark on the Lake revealed that the property was not performing up to its potential, largely as a result of under-management.

"The opportunity for both income growth and capital appreciation was enormous," Mr. Malkin says. "Our studies showed that Milwaukee was making a successful transition from a manufacturing to a service economy, while getting good marks for quality of life. We acquired the property well below replacement cost and immediately put our management and marketing skills to work."

The Landmark transaction is the second very profitable sale of residential property this year by W&M for Wien & Malkin investors. In February, the 424-unit Penderbrook garden apartment complex in Northern Virginia was sold to one of the largest residential developers in Virginia, Maryland and North Carolina for $75 million, which is about three times the property's 1996 acquisition cost. The new owner also is planning a condo conversion.

Like Landmark, Penderbrook was under-performing when acquired by W&M. It was purchased partly because of its prime location in the heart of a key suburb of Washington, D.C., which indicated strong growth potential.

Information regarding sales prior to closing should generally be treated as confidential.