Istithmar to buy Barneys department store for $950m

Clothing company Jones Apparel Group is in talks to sell luxury department store Barneys New York to Istithmar, the Dubai-based firm that has recently been active in the New York real estate market.

Istithmar, the private equity firm owned by the government of Dubai, is bidding for luxury department store chain Barneys New York according to a source close to the buyout firm. Media reports said the bid is around $950 million (€715 million).

The New York Post said Istithmar is in the final stage of the deal, which has taken several months.

Jones Apparel Group, which currently owns Barneys, bought the chain three years ago for $400 million.

A New York-based retail analyst said of Istithmar: “They’ve been in town a bunch.”  The buyout firm owns US discount retailer Loehmann’s and buildings at 230 Park Avenue and 450 Lexington Avenue. Earlier this year, the firm purchased a majority stake in the Mandarin Oriental hotel, which is part of the Time Warner Center. The sellers included the Mandarin Oriental hotel company, Apollo Real Estate and The Related Companies. Istithmar also owns the Knickerbocker Hotel in New York City and The W Hotel in Union Square.

Department stores are popular with both private equity firms and real estate invetors because they offer both operating company upside as well as real estate opportunities. Earlier this month UK private equity firm Lion Capital bought Dutch store Hema from its parent company Maxeda, which itself is owned by a private equity firm. The price was thougt to be around €1.1 billion.

 The Post said Istithmar will probably expand the chain overseas.