A year and a half after blowing up New York City’s investment sales market, Kering is looking to unload a stake in its big acquisition on Fifth Avenue.
The French luxury group is in exclusive talks with private investment firm Ardian to sell a stake in 717 Fifth Avenue, Reuters reported. The size of the stake and the valuation of the Plaza District building are unclear; both parties declined to comment on the negotiations.
Kering bought the retail portion of 715-717 Fifth Avenue early last year, paying Jeff Sutton and SL Green a staggering $963 million. The parent company of Gucci, Balenciaga and Alexander McQueen seized on the opportunity to own 115,000 square feet of prime retail real estate.
The acquisition was part of its strategy to buy prime assets in markets across the world, Kering said in a statement, having recently bought properties on avenue Montaigne and rue de Castiglione in Paris.
It was an example of an emerging trend where retailers in Manhattan have been acquiring their own premium real estate. Around the time of the Kering deal, Prada paid $835 million for 724 and 720 Fifth Avenue, also sold by Wharton Properties boss Sutton.
As consumer demand for luxury goods has waned, however, Kering became saddled with a load of debt; by the end of last year, the debt soared to approximately $12 billion. It moved to start cutting costs and sell stakes in real estate across the globe.
A few months ago, Ardian agreed to take a 60 percent stake in a Kering joint venture that owned three major properties in Paris. Properties in Milan’s Via Montenapoleone and in Tokyo also appear to be available.
Kering is aiming to raise at least 2 billion euros — equivalent to nearly $2.3 billion — through real estate transactions in the next two years.
“We continue to work not to resell these assets, but to sell part of them and have a co-shareholder,” Kering deputy chief executive officer Jean-Marc Duplaix told shareholders in April.
— Holden Walter-Warner
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