Gucci's Parent Company Takes Haircut In Sale Of Fifth Avenue Trophy
Less than two years after buying a retail condo at 715-717 Fifth Ave., Kering has moved the space to the sales rack.
The parent company of Gucci, Yves Saint Laurent and Balenciaga sold a 60% stake in the 115K SF property to French private equity firm Ardian. The transaction values the property at $900M, roughly 7% less than the $963M that Kering paid for the multilevel condo in January 2024.
Kering will pocket net proceeds of $690M from the deal and retain a 40% stake in the property, according to an announcement by the companies.
“This marks Ardian’s first real estate investment in the United States and our strategic expansion into this highly attractive market,” Ardian Head of Real Estate Stéphanie Bensimon said in a statement.
The Paris-based global investment firm manages or advises on $196B of assets.
Eastdil Secured, which represented retail real estate mogul Jeff Sutton in the original sale to Kering, served as commercial real estate adviser to Ardian.
Kering's 2024 purchase was the biggest deal in a string of retailers scooping up their Manhattan flagships at huge valuations. Just weeks before its deal closed, Prada paid more than $820M for two buildings at 720 and 724 Fifth Ave. across the street.
The pace of those deals has slowed, retail experts told Bisnow at ICSC New York last week.
The 717 Fifth Ave. deal is part of a larger partnership between the two French companies. In January, Kering transferred three properties in Paris’ high-end shopping corridors to a joint venture with Ardian.
Kering similarly kept a 40% stake in the properties and received $860M in net proceeds, according to Reuters. One building is on Place Vendôme, and the other two are on Avenue Montaigne.
“As we continue to execute our strategy regarding the management of our real estate portfolio, we are pursuing our successful partnership with leading investment firm Ardian,” Kering Chief Operating Officer Jean-Marc Duplaix said in a statement. “Like the investment agreement already signed in Paris, this transaction allows us to secure another long term highly prominent retail location for our Houses while enhancing our financial flexibility.”
Kering and its holding company, Artemis, have been loaded with debt, in part because of a number of large acquisitions made by the Pinault family.
Artemis’ holdings have a net asset value of around €28B, about four times its own debt, while Kering holds about €10B of debt, the Business Times reported in September, citing anonymous sources. The Pinaults’ net worth has declined by more than half in the past four years.
Artemis has previously told outlets it faces no liquidity issues, despite a reduction in dividends from Kering and other holdings.
Kering has been targeted by short sellers after the company reported a 46% net income drop in the first half of the year.
The fashion giant is now undergoing a turnaround effort. A new CEO has replaced François-Henri Pinault. Last year, new executives were also appointed at Saint Laurent, Balenciaga and Gucci.
As part of those efforts, Kering announced plans to close around 80 stores by the end of this year as well as sell real estate in New York, Paris and Milan.
