NEW YORK — Federated Department Stores Inc. on Monday completed a $100 million deal to sell the historic Filene's flagship in downtown Boston to Vornado Realty Trust.
Vornado did not give details of its plans for the site, although there has been speculation that Wal-Mart, Target, Kohl's, the Home Depot and Jordan's Furniture, a regional operator owned by Berkshire Hathaway, are among the firms that have expressed interest.
Federated will continue to operate the Filene's clearance center on the first floor at least through this summer, the company said in a statement Monday. The two lower levels are operated by Filene's Basement, which has a long-term lease there and is owned by Retail Ventures Inc.
The sale is the latest installment in Federated's strategy since its $17 billion acquisition of May Department Stores last year to divest itself of units in cities and malls where it has more than one store. The Filene's deal is among the most dramatic. The flagship, with eight levels and 656,000 square feet, is a Boston icon. It was founded 1890 and the building is an official city landmark.
Another key location Federated has up for sale is the six-level Strawbridge store in downtown Philadelphia. Last month, Federated agreed to sell Lord & Taylor, including L&T's Fifth Avenue flagship here, to NRDC Equity Partners for $1.2 billion.
Other properties being sold are in malls. Federated has sold 57 locations, including the Filene's flagship, and wants to jettison another 23.
It's possible some locations will be converted to Federated's Epicenter Collection, a new format for malls that would transform former department stores into 180,000- to 200,000-square-foot showcases for catalogue and Internet companies to display their products in shop settings. No Epicenters are up and running, but Federated is in talks with Epicenter developer Sheldon M. Gordon.
Vornado Realty Trust, a real estate investment trust, is one of the largest owners and managers of real estate in the U.S., controlling 104 million square feet that is largely office and retail space in the New York and Washington metropolitan areas. Among the company's interests are a 33 percent stake in Alexander's Inc., a 33 percent stake in Toys 'R' Us, and the Hotel Pennsylvania here.Federated will continue to have a presence in downtown Boston with its Macy's unit, which was converted from a former Jordan Marsh. Macy's and Filene's are in an area called Downtown Crossing, considered the busiest intersection of the city, traversed by more than 100,000 people each day.
The Boston area has been attracting lots of retail interest. Federated previously announced the closing of eight Filene's stores in Massachusetts. Nordstrom is moving into three malls; Barneys New York in March opened in Copley Place and is being remerchandised, and Saks Fifth Avenue has been remodeling its Copley Place store.
The Federated-Vornado deal on Filene's is expected to be completed in the fourth quarter of 2006. Federated said proceeds from this transaction are included in the $400 million to $500 million after-tax total expected from the sale of duplicate stores nationwide, as previously announced.
About 400 former May doors become Macy's on Sept. 9.
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