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Digging Into General Growth Properties' $1.8 Billion Manhattan Purchase

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Digging Into General Growth Properties' $1.8 Billion Manhattan Purchase
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After the bell on April 21, General Growth Properties Inc (NYSE: GGP) announced a ~$1.8 billion purchase of the 26-story Crown Building located at the corner of 57th Street and 5th Avenue in mid-town Manhattan's Plaza District.

While many investors are familiar with General Growth being the second largest owner of U.S. regional malls, it is perhaps less well known that owning strategically located urban retail is part of GGP's core business strategy.

Another thing that most investors may not realize is that marked-to-market rents could be well in excess of $3,000 per square foot for this Manhattan street retail space.

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Source: GGP company presentation

According to the General Growth release, "GGP and Jeff Sutton will own, redevelop, lease and manage the retail portion of the property.

Related Link: Real Estate Crowdfunding: Are IPOs The Next Step?

The retail is currently occupied by tenants such as Bulgari, Piaget, and Mikimoto and is comprised of approximately 100,000 square feet."

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Source: GGP company presentation.

It is unclear at this time if additional retail expansion is planned.

Over the past 25 years, GGP retail partner Jeff Sutton "has amassed over 120 properties in prime locations throughout New York City. Jeff's most notable acquisitions include his purchase of 724 Fifth Avenue, 720 Fifth Avenue, 717 Fifth Avenue, 650 Fifth Avenue, 609 Fifth Avenue and 509 Fifth Avenue."

Capital Group and Michael Shvo will be handling the leasing, management of floors four through 26 -- an additional 290,000 square feet of office space -- which is planned to be redeveloped into luxury residential condominiums.

REIT Next Door

Another major player REIT player in the high-end Manhattan street retail scene has been Vornado Realty Trust (NYSE: VNO).

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Vornado CEO Steve Roth mentioned in a recent Citi Presentation this past March that the company's Manhattan street retail assets were ~96 percent leased.

Incredibly Valuable Retail

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Perhaps even more impressive, was the rent per square foot and 10-year compound annual growth rate (CAGR) comparisons between Vornado's Manhattan office and street retail assets.

The 16.5 percent CAGR for Vornado's Upper Fifth Avenue street retail topped the chart, with a 361 percent increase in rents from 2004 to 2014.

Clearly, the newly acquired General Growth Properties Crown Building street retail could be some of the most valuable and sought after retail real estate in the world.

Posted-In: General Growth Properties Manhattan Plaza District REITNews REIT Retail Sales Asset Sales Real Estate Best of Benzinga

 

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