The Carlyle Group (CG) closed Tuesday on the purchase of an interest in the retail condo at 666 Fifth Avenue, the tower that Kushner Companies bought last year for a then-record $1.8 billion, according to a source familiar with the deal.
The Carlyle Group—the mammoth private-equity group that manages $82.7 billion in 60 funds worldwide and recently, with Ashkenazy Acquisition Corp., bought 650 Madison Avenue for $680 million—is buying in partnership with Stanley Chera’s Crown Acquisitions. The 49 percent stake, as reported by Bloomberg News, in the approximately 90,000-square-foot retail portion, which includes a Brooks Brothers and the NBA Store, is valued in the deal at $525 million.
Kushner Companies added value to the deal by buying out the remainder of the Brooks Brothers’ below-market lease, which was originally scheduled to expire in 2014. Now, Brooks Brothers will vacate by Jan. 31. Abercrombie Kids recently signed a lease to occupy half of the Brooks Brothers space, starting Feb. 1, at an estimated $2,500 a square foot.
Jeffrey Roseman, executive vice president of Newmark Knight Frank Retail, said that that is the highest retail rent in the city “by a country mile.”
“The highest deal before that was Armani; that was maybe $1,600 to $1,700 a foot at 717 Fifth Avenue,” Mr. Roseman said. “That stretch of Fifth Avenue is just incredible. … Probably the highest-grossing stores per square foot in New York are Abercrombie & Fitch at 56th and Fifth and the Apple Store at 58th and Fifth. Those stores are doing anywhere between $6,000 and $10,000 a square foot. In New York, a store is considered successful if it earns $800 a square foot.”
“This sets a new rent level, but we’ve been close to that before,” added Faith Hope Consolo, chairwoman of Prudential Douglas Elliman’s Retail Leasing and Sales Division. “That’s a new high. But you know what, it’s a corner, it’s got huge frontage, it’s a southbound corner on a southbound street. It doesn’t get any better.”
The retail space has more than 200 feet of frontage on the gilded Fifth Avenue.
The deal, which is being financed by Barclays and SL Green and was brokered by Carlton Group’s chairman, Howard Michaels, comes at a good time. This transaction will allow Kushner Companies to pay off $335 million in short-term debt.
Kushner will retain a 51 percent interest in the retail condo as well as continue to own in full the 1.45-million-square-foot office tower where it’s located. (Jared Kushner, a principal at Kushner Companies, is The Observer’s publisher.)
A spokesman for Kushner Companies had no comment.