Monarch Buys Majority Stake in Miami’s Citigroup Center

Monarch Alternative Capital LP has acquired a majority interest in the Citigroup Center office building located in downtown Miami, its fifth office building investment in 2021.

Monarch, an investment firm with approximately $9 billion of assets under management, says that these five acquisitions exemplify its strategy of capitalizing on the disruption in the office sector by focusing on well-located Class A properties within growing metropolitan areas.

The asset quality of the Citigroup Center and macro tailwinds in the Miami market stemming from the pandemic and relocation trends drew Monarch to the property. The 34-story and 809,594 square-foot renovated property is the second largest Class A office building in Florida. Monarch plans to finish renovations undertaken by the prior owners and open a dining option within the property.

The Citigroup Center sits within Miami’s central business district and is home to global financial institutions, law firms and technology companies. The building offers full amenities to its tenants and newly renovated features.

“We believe that the Citigroup Center is well-positioned to capture growing demand for office space in Miami as existing Florida tenants look to upgrade their office space and companies across various industries enter the market,” said Joshua Acheatel, senior investment professional at Monarch, in a prepared statement. “Monarch plans to dedicate significant capital and resources to the building to ensure that the Citigroup Center continues to be a compelling choice for existing and new employers in the market.”

Tourmaline Capital Partners, a real estate investment and operations firm focused on the office sector, and CP Group (formerly Crocker Partners), the largest office landlord in Florida, will operate the property in concert with Monarch.

Monarch has also been active in acquiring distressed hotels, including Eagle Hospitality Trust portfolio of troubled US hospitality assets.

While Monarch has successfully secured troubled assets, there hasn’t been nearly as much distress in CRE as expected.

But a May Moodys’ Analytics REIS report points to looming issues in the office sector. 

Vacancies soared in the first quarter of the year, with the national rate rising by 40 basis points to end the period at 18.2% and 15.8 million square feet of occupied stock being removed from the market. Asking rents fell by 0.3%, while effective rents dropped by 0.8%.

“It appears that distress is finally manifesting in ways somewhat commensurate with the upheaval in the general economy from last year,” according to Victor Calanog, head of Commercial Real Estate Economics at Moody’s Analytics.