Brookfield offloads 530 Fifth retail at a discount

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Brookfield Property Partners is selling its retail condo at
530 Fifth Avenue for $190 million just four years after its was valued at $334
million.

While the company has declined to comment on the deal,
sources close to the transaction said Aurora Capital Associates has partnered
with hedge funder Edmond M. Safra on the acquisition.

The sale comes days after Vornado announced it was offloading
five Manhattan retail properties at 677 – 679, 759 – 771 and 828 – 850 Madison
Avenue, 478-482 Broadway and 155 Spring Street for $184.5 million – nearly half
what it paid for them between 2004 and 2006.

The properties currently have negative income and street
level occupancy is approximately 30 percent, according to Vornado.

The retail at the block-long 60,000 s/f retail condo at 530
Fifth, on the other hand, is fully occupied by tenants including Duane Reade,
Chase Bank, Ugg and Five Below.

Nevertheless, the sale comes as the Manhattan retail leasing
sector suffers its 15th consecutive quarterly drop rents, according to the
newest report from CBRE.  Average asking
retail rents fell 10.7 percent year over year to $615 per square foot.

Leasing velocity has now decelerated for eight consecutive
quarters, according to CBRE’s tracking of 16 major retail corridors in
Manhattan. The number of direct, ground-floor availabilities increased to 290
during the second quarter, from 275 locations in the prior period. This marks a
record-high availability of retail space, CBRE said.

CBRE noted that current rent rates are at the lowest levels in nearly a decade.

RXR owns the office portion of 530 Fifth Avenue

Brookfield secured majority ownership of the 530 Fifth retail
following its $9 billion acquisition of GGP Properties, which had bought the
entire building in a joint venture with Thor Equities and RXR Realty for $595
million in June 2014. According to public records, Thor and GGP chipped in $295
million to the purchase price for control of the retail condo while RXR kept
the 26 story office. Thor may still own a slither of the retail, according to
Brookfield filings.

Cushman & Wakefield’s Adam Spies, Kevin Donner, Marcella Fasulo, Doug Harmon, Adam Doneger, Josh King and Ben Lushing brokered the sale.

After spending $6.5 billion to acquire all the shares of Brookfield Property Partners LP that it didn’t already own, Brookfield Asset Management said last month it aims to raise $25 billion from commercial property sales to power its next stage of growth.

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