In July 2004, Ivy acquired the former Toys R Us Headquarters located at 225 Summit Avenue in Montvale, NJ. The property consisted of an existing two-story 142,000 square foot office building on 40 acres with an approved 250,000 square feet of expansion opportunity.

The strength of the property lies in its excellent location. The property occupies a highly visible and easily accessible location in one of New Jersey’s most sought after corporate markets. The greater Montvale / Woodcliff Lakes market serves as national headquarters to such fortune 500 companies as, A&P, BMW, Mercedes Benz, Sony, Ingersol Rand., Benjamin Moore, Eisai Pharmaceuticals, Western Union, Hertz and KPMG.

The acquisition of this property presented a number of difficult issues.  The building layout, though functional, was wrapped in a 1960’s dated pre cast concrete façade.  The expansion rights approved exceeded the square feet needed by most corporate users.  We needed to extract value from the adjacent land other than utilizing it as office expansion.

Ivy’s operating company developed a plan to reposition the building and rezone the additional acreage. Ivy designed a modern façade, new building systems and re-worked the campus setting to attract a headquarters user. To lower its cost basis and pay for the renovation, Ivy subdivided 20 acres of land and sought a zoning change to residential. The conversion of 20 acres into 8 single family and 20 townhouses created a highly desirable cul-de-sac community that was a readily saleable asset.

The residential conversion reduced Ivy’s basis in the property by 66%. This enabled Ivy to renovate and reposition the office building as a first class headquarters building at a low cost basis. We leased the entire property to Barr Pharmaceuticals (symbol: BRL) as its US Headquarters. Our IIR is expected to exceed 30%.