Thor Equities is partnering with the mall real estate investment trust General Growth Properties to buy the office and retail building 685 Fifth Avenue from retailer Gucci for more than $475 million, sources told The Real Deal.
This would be the second large retail and office building GGP and Joe Sitt’s Thor have joined to buy on the street. Yesterday, it was disclosed that Thor, GGP and Scott Rechler’s RXR Realty had signed a hard contract to pay $595 million for the 500,000-square-foot 530 Fifth Avenue, from a partnership including Murray Hill Properties, Crown Acquisitions, Jamestown and Rockwood Capital.
Thor has been on the hunt for months for an equity partner to buy the 115,300-square-foot 685 Fifth, located at the corner of 54th Street. Retail tenant Diesel occupies the 20,000 square feet of retail on the lower floors. The trade publication Real Estate Alert first reported that Thor had agreed to buy 685 Fifth for between $475 million and $500 million. Thor planned to spend a total of $670 million (including the purchase price) to acquire and reposition the building, and had been seeking one or more partners to take 50 percent of the deal, the report said.
It was not clear if there would be additional partners on this transaction. A spokesperson for RXR said the firm was not involved in the acquisition of 685 Fifth Avenue. Sitt declined to comment, and GGP did not respond to a request for comment.
Some see GGP’s newly aggressive stance in New York City as the fruits of hiring Sandeep Mathrani, the former president of retail for Vornado Realty Trust, who since 2010 has been CEO of Chicago-based GGP. Insiders said he was likely using his extensive knowledge from years of work in New York City to strike deals. Before he joined Vornado, he was with Forest City Ratner.
“If they want to be in New York City they have selected a guy who knows…this town,” said Lawrence Longua, real estate consultant and former clinical professor at New York University. “I imagine that he’s got as good a Rolodex as anybody.”
Once closed, this deal will add to a large portfolio Thor holds on Fifth Avenue, including 520 Fifth Avenue, located at 43rd Street, as well as 693 Fifth Avenue, located between 54th and 55th streets.
“Given the incredible increase in demand from luxury retailers on that strip of Fifth Avenue it is easy to assume that the play here will be reposition space at the bottom of these properties,” said Dan Fasulo, managing director of data firm Real Capital Analytics.