Qatar and Crown to acquire stakes in iconic properties in New York

The Qatar sovereign wealth fund has partnered with the US real estate group Crown Acquisitions to acquire a stake in some of New York's most iconic properties in Times Square and along Fifth Avenue, including the St Regis Hotel and the jeweler's Harry Winston luxury.

Crown and Qatar Investment Authority will each acquire a 24% interest in a portfolio of properties controlled by Vornado Realty Trust, valued at $ 5.6 billion. The portfolio consists of 910,000 square feet of retail space along Fifth Avenue and includes Victoria's Secret, Polo and Salvatore Ferragamo tenants.

The deal is expected to be scrutinized given the close ties between the Qatari royal family and US President Donald Trump's son-in-law, Jared Kushner, whose own family-owned real estate empire has struggled in recent years. indirectly benefited from the assistance of QIA.

The Kushner companies had reached an agreement in 2018 to lease 666 Fifth Avenue to Brookfield Asset Management, a real estate group in which the Qatari government has invested, a move that helped Mr. Trump's son-in-law's family to move out. of a deficit building. bet. This agreement came months after Vornado agreed to resell its stake in the tower at Kushner, while retaining the commercial portion of the building below.

Under this new contract, Crown and QIA will take a retail stake in 666 Fifth Avenue, which includes tenants, Hollister and Uniqlo. Mr. Vornado said he would use $ 390 million out of the $ 1.3 billion in cash paid by Crown and the Qataris to repay a loan on 666 Fifth Avenue, according to a document filed by US securities authorities securities.

The Fifth Avenue properties included in the case are located a few blocks from the Trump Tower, which extends from 51st to 55th Street. The increased presence of security after the 2016 presidential election has weighed on sales from a number of retailers in the region. Tiffany & Co announced that sales at its flagship Fifth Avenue site had dropped.

The deal also comes at a time when the New York real estate market has eased and where homeowners have been subjected to a wave of new openings, including the multi-billion dollar development of the Hudson Yards in the extreme west of Manhattan.

"It's a market that has gone from one of the hottest ones with significant growth to a market that has seen significant write-downs and high vacancy rates," said James Sullivan, an analyst at BTIG.

Times Square's popularity with tourists has protected it from recession, said Sullivan. "It's a market to be distinguished from other Manhattan markets," he said.

But Fifth Avenue is now being tested by numerous additions that have made it stand out as the premier luxury shopping destination, with several venerable retailers, including Ralph Lauren, closing their doors.

According to a report from New York's Real Estate Board, Upper Fifth Avenue, between 49th and 59th Streets, saw its rents fall by 24% compared to the fall of 2018, according to the report of the Real Estate Board of New York . The 49th plunged 14%.

The battle for luxury retailers has now reached the southern tip of Manhattan, where the huge Brookfield real estate has opened up a luxury mall, ranging from the West Side Highway to Hudson Yards at the bottom of Central Park where Nordstrom is building the second of two department stores in the area.

Vornado has sold a number of his properties in Manhattan in recent months as rents for commercial premises have fallen. The drop in rental prices was caused by the collapse in store sales, as consumers, even those considering a Gucci purse at $ 4,000 or Prada pumps at $ 890, are buying more and more. more goods online.

For the Qatari fund, the agreement represents the latest step taken to strengthen its presence in the United States, where it plans to invest up to $ 45 billion over the next few years.

"This investment demonstrates QIA's ambition to significantly increase our US investments over the next few years and our confidence in the exciting long-term opportunities offered by New York City," said Mansoor Al-Mahmoud, Director. General of QIA.