Kim Kardashian’s apparel company signed a lease for a Fifth Avenue retail space in a deal that appears to be for a fraction of what it cost the prior tenant.
Skims Body leased 20,000 square feet at Oxford Properties and Crown Acquisitions’ 647 Fifth Avenue for at least 75 percent below what Versace paid for the same space, according to Crain’s. The drop between tenants was revealed in a report last week from Fitch Ratings, which also noted a downgrade in a mortgage backing the Skims space and several others.
While the exact rent Kardashian’s shapewear brand is paying wasn’t disclosed, there’s enough information available publicly for a rough estimate. Donatella Versace’s company was paying $770 per square foot, according to a 2022 KBRA report. So Skims is likely paying less than $200 per square foot.
The multihyphenate Kardashian was likely able to score a deal because neighboring retailers are moving on from their Fifth Avenue locations, giving the company serious leverage.
Olympic Tower’s retail space is fully leased, according to Oxford, and the landlord was also negotiating a lease for the office space. Retail space takes up 28 percent of the property, but accounts for more than 60 percent of the rent.
Institutional investors have owned the mortgage — which had seven classes downgraded by Fitch — since 2017. The $760 million mortgage is due to mature in 2027. Since the mortgage’s sale, cash flow has dropped by 13 percent, down to $56 million annually.
Skims is expected to open its store by February. The company’s valuation last year was $4 billion, an increase of $800 million from 2022. Versace started its departure from the space in 2018 when it put up the retail storefront for sublease.