In its largest urban redevelopment effort and investment to date, San Francisco-based real estate investment management firm MacFarlane Partners will spend as much as $500 million to buy retail and office space in the $1.7 billion AOL Time Warner center under construction in New York.
The purchase of about 49.5 percent of the center’s space from developers The Related Cos. and Apollo Real Estate Advisors includes 347,000 leasable square feet of shops, restaurants, entertainment and public spaces, about 90 percent of which has already been committed. It also includes 211,000 square feet of non Time Warner AOL office space, which will include the offices of development partners Related and Apollo, and a parking garage.
MacFarlane Partners' investment was made through a joint venture with the California Public Employees' Retirement System.
The purchase price will not be set until Jan. 31, 2005 when the transaction is complete, but its value is estimated to be between $425 and $500 million, MacFarlane said. AOL Time Warner Center is scheduled to open this fall.
MacFarlane’s planned purchase includes The Shops at Columbus Circle—a retail venue of 347,000 leasable square feet consisting of shops, restaurants, entertainment uses and grand public spaces. About 90 percent of the space at The Shops has been committed. Tenants include: Hugo Boss, J. Crew, Cole Haan, A/X Armani, Stuart Weitzman, and LVMH's Sephora and Thomas Pink. The center also includes a 31,000-square-foot Equinox fitness center, and a Whole Foods upscale supermarket offering a 60,000-square-foot combination restaurant-market.
In addition, MacFarlane Partners is investing in a fund that will own and operate two restaurants and an upscale lounge bar. They are Chef Thomas Keller's encore to The French Laundry, his restaurant in California's Napa Valley, and a steakhouse presented by Jean-George Vongerichten, chef and owner of a number of New York’s renowned restaurants.
"We welcome the addition of MacFarlane Partners' experience with urban retail and mixed-use urban core projects," said Stephen M. Ross, chairman and CEO of Related. "They also bring a sensitivity to the surrounding community in which a large development like this resides. We expect this to be one of numerous deals we are pursuing with MacFarlane Partners across the country."
MacFarlane is a minority-owned real estate investment manager and developer of urban real estate projects across the country, with $900 million of equity and an expected $3 billion in assets under management. It says it’s committed to investing in or developing urban projects that unlock the economic potential in underserved communities, creating jobs, providing affordable housing and economically empowering residents and businesses. The company's partners are industry veterans Victor MacFarlane, Charles "Chuck" Berman and Suzie McGill.
The investment agreement doesn’t include other components of the development, such as 879,000 square feet of office space to be acquired by AOL Time Warner for its new world headquarters, Jazz at Lincoln Center, the Mandarin Hotel or 191 residential condominiums. The investment does not include any investments in, or obligations to, AOL Time Warner.