Exclusive: In surprise, General Growth eyes New York office tower
By Ilaina Jonas
NEW YORK (Reuters) - General Growth Properties Inc (GGP.N: Quote) has paired with Brookfield Office Properties Inc BPO.TO to bid for an expensive New York building in what could mark the No. 2 U.S. mall owner's entry into a new segment of the retail real estate market, according to two sources familiar with the deal.
Bids for the 27-story office and retail building at 650 Madison Avenue, one of the toniest shopping and office districts in Manhattan, could exceed $1.3 billion, the sources said.
Other bidders include Vornado Realty Trust (VNO.N: Quote), one of the sources said. The decision on the winning bid is expected next week, the source said.
Eastdil Secured is brokering the sale of the building, which is owned by private equity firm Carlyle Group LP (CG.O: Quote).
General Growth, Carlyle and Brookfield declined comment. Vornado and Eastdil did not respond to requests for comment.
General Growth's interest in the building, which has not been previously reported, surprised industry executives. The company has long focused on operating malls and buying the New York building would mean a foray into what is known in the industry as urban street-level retail real estate.
Unlike malls whose popularity grew with the rise of U.S. suburbs as destinations that people typically drive to for shopping, the New York building has space for a handful of stores in a shopping and office district in the middle of the city.
The building is around the corner from the famous Fifth Avenue Apple store, known for its glass cube entrance. The current retail tenants include home goods store Crate & Barrel and Italian designer shoemaker Tod's. Ralph Lauren Corp (RL.N: Quote) has its office, but not a retail store, in the building. Continued...