Macy’s in real estate deal with Tishman Speyer for Brooklyn store
New York -- Macy’s has joined the increasing number of retailers tapping into their real estate assets.
Macy’s on Wednesday announced a real estate purchase agreement with developer Tishman Speyer to sell several of the nine floors of the Macy’s store on Fulton Street in Brooklyn, New York. The real estate transaction is expected to be completed in the fourth quarter, and Macy’s is expected to record a gain of approximately $250 million in its fiscal fourth quarter of 2015.
Under the terms of the deal, Macy’s will continue to own and operate the first four floors and lower level of its existing nine-story Fulton Street retail store, which will be reconfigured and remodeled. Tishman Speyer will redevelop the other floors into office space. The company is also purchasing Macy’s parking facility, which could be used for a future mixed-use development.
Macy’s will receive $170 million in cash from Tishman Speyer and will receive an additional $100 million over the next three years that will be used as a contribution toward renovation of the Brooklyn Macy’s store.
Macy’s Brooklyn store currently occupies 378,000 sq. ft. of selling space on eight floor. It will be remodeled to 310,000 sq. ft. on five floors (levels one through four, as well as the basement. The interior of the store will be entirely remodeled, from top-to-bottom Key architectural elements of the exterior of the building will be preserved. The store will remain open and operating through the remodeling process.
“In recent years, it has become clear that our Fulton Street store requires major improvements in order to serve the Brooklyn of today, as well as future generations of customers. We invested the time and resources necessary to fully study and understand the opportunity for making a major positive impact on Brooklyn and selecting the most capable partner in the project. We are now moving forward with a bold and exciting project with Tishman Speyer, one of the world’s most experienced and visionary developers,” said Terry J. Lundgren, Macy’s chairman and CEO.