Vornado Realty Trust has announced that it will acquire retail space at New York 666 Fifth Avenue, expanding its best-in-class Manhattan street retail portfolio.
The company announced in a statement that it has entered into an agreement to acquire a retail condominium located at 666 Fifth Avenue at 53rd Street for approximately $707 million, expanding its best-in-class 2.2 million square foot portfolio of Manhattan street retail.
According to Bloomberg, Vornado, which reported a 31 percent drop in funds from operations in the first quarter, is seeking ways to boost its share price and respond to shareholder complaints that its structure is too complex, Chairman Steven Roth said in a letter to investors in April. The real estate investment trust expects to sell about $1 billion of assets by the end of 2012, Chief Executive Officer Michael Fascitelli said at a conference last month.
The asset has 126 feet of frontage on Fifth Avenue and contains 114,000 square feet, 39,000 square feet in fee and 75,000 square feet by long-term lease from the 666 Fifth Avenue office condominium, 49.5 percent owned by Vornado. This retail space is leased to Uniqlo, Hollister and Swatch.
The company announced that the purchase will be funded with property level debt and proceeds from asset sales and is expected to close in the fourth quarter of this year, subject to customary closing conditions.
The Wall Street Journal reported that the tentative sale of the space between 52nd and 53rd streets, one of the largest New York transactions on record for store locations, speaks to the soaring demand for top retail property in the city. The sale marks a turn of fortune for the sellers, a partnership of Crown Acquisitions Inc, Carlyle Group and Kushner Cos on the space, which is separate from the office building overhead.
The section that the company is buying also contains other flagship stores including the Uniqlo, the Japanese clothier which it leased its space for a record $300 million over 15 years. The other tenants are watchmaker Swatch and Hollister, a youth-oriented apparel shop. The purchase will probably be completed in the fourth quarter, Vornado said.