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Alexander's department store for sale?

Real estate sources say Alexander's Inc. is on the block in its entirety for $400 million. The 11-store chain has been experiencing fiscal difficulties along with most of the retail sector. The company, through spokepeople, declined to comment.

Lastweek, newspaper began reporting that the lease on the 98,000-square-foot World Trade Center store had been sold for $10 million and that the store would be closed before the summer. The lease terminates in 2010 but has a 20-year option and experts sat it could bee valuable to other parties.

Robin Farkas, chairman of Alexander's denied the sale of the lease saying there was "no truth to the rumor", which was reported as a "done deal" in city newspapers. One real estate source, however, said "There has been activity on that lease but they want to package the entire entity."

A spokeswoman in Farkas' office said, "Obviously, if somebody comes up with an offer that can't be refused, anything in the world is for sale. But meanwhile, no part of Alexander's is for sale."

Alexander's has been suffering financial difficulties and is expected to show an $11.2 million loss for the half year period ending Feb. 8. Several industry sources, who asked not to be identified, said the financial situation is affecting the Midtown store at 59th Street, and other sites as well. Last year, the company sold its lease at Roosevelt Field back to the mall. A $10 million dollar influx from the World Trade Center lease sale would help the retailer stay solvent and boost its net worth by $5 million needed to satisfy creditors.

Abraham Wallach, senior vice president of First Capital Management, explained that for Citibank, getting the shares is the first step. "But they now have ownership in a company that is faltering, at best, he said. While the Alexander's real estate is prime, the market being what it is, makes the sale of those properties for redevelopment very, very difficult.'

Donald J. Trump bought a 27 percent stake in Alexander's for nearly $70 million when the real estate was worth considerably more for potential development sites. That stock was pledged to Citicorp which has completed a deal with Trump to take it back. He said through a spokeswoman that at this time he still has the stock.

Interstate Properties, a New Jersey based real estate company owned by the Mandelbaum family and chaired by Steven Roth, own another 29 percent of Alexander's Inc. A spokesperson said their stock is not for sale. Although real estate sources said they have the ability to hold for the long-term, the Mandelbaum family was the key investor behind Norman Dansker, the co-op converter and principle Coronet Properties. Recently, a major Interstate shopping center in Princeton, New Jersey was taken by the lender.

Carlo Bianci, the leasing agent at the World Trade Center who is in charge of the account, said although Alexander's approached them sometime ago, no discussions have taken place recently. Other brokers confirmed that the lease had been offered to them about six months ago, while others claimed the entire chain has been for sale "for years."

Since the reports of the possible lease-sale first appeared last week, the World Trade Center has been "flooded with calls" about the space, which is small for a department store but large for other retailers, should probably be divided and mentioned retailers such as The Gap, or Barnes and Noble as two that might succeed in that area. "It's a tough situation," added another broker. "Anything that happens with Alexander's will affect other deals in the World Trade Center, as well."

"It's a very complex situation with different investors and different needs," added Wallach.
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Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Mar 25, 1992
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