Paris, 21 Decembre 2023
Estimated reading time: 3 minutes
In a bold move that shook the worlds of luxury and New York real estate, the Italian fashion house Prada has acquired a prestigious building on Fifth Avenue, completing a direct purchase for the colossal sum of $425 million.
This move marks the end of a multi-year legal battle with the owner of 724 Fifth Avenue, where Prada had been leasing space since 1997.
The transaction, settled in cash and financed by internal resources, was finalized on Tuesday, Prada said in a statement to regulators in Hong Kong, where the company’s shares are listed.
The building, located across from the Trump Tower and spanning between 56th and 57th streets, is recognized as one of the most iconic retail spaces globally.
Before reaching an agreement, Prada and the seller, Wharton Properties LLC, led by Jeff Sutton, had been embroiled in a dispute in the New York State Supreme Court.
Prada had filed a lawsuit against 724 Fifth Fee Owner LLC and its director in December 2019, alleging various grievances related to the lease and the use of space.
Sutton had asserted that his company intended to renovate the building, which would have required the temporary closure of the Prada store and its relocation to adjacent space.
However, complications arose when Prada unexpectedly terminated its commitment to lease the replacement space in October 2019, a move that led to an escalation of the dispute.
A particularly contentious issue in the litigation concerned the use of scaffolding outside the Prada store, which Prada viewed as an attempt at coercion and harassment.
According to Prada’s statements, while these structures were initially erected for safety work, they remained in place long after the work was completed, contributing to an already tense conflict.
The judge ultimately ruled that the owner could not revoke its suspension notice and could be held liable for damages suffered by Prada.
However, it was established that Prada did not have the right to demand that Sutton proceed with the redevelopment or to receive a $5 million indemnity to which it would have been entitled if the work had taken place.
The 12-story, nearly 78,765-square-foot building, with over 68,491 square feet of leasable space, was valued between $385 and $426 million.
This valuation takes into account the prime location, the vibrancy of the New York real estate market, and the terms of Prada’s existing lease for the retail space.
The brand expressed that the location offered high strategic value, with increasing scarcity and long-term potential, highlighting a recent influx of investments in the neighborhood that have enhanced its residential, hotel, and commercial appeal.
Prada plans to maintain this space as its flagship store while adding office and storage facilities for the group.
Photo credits : Prada Group
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