NEW YORK CITY — Vornado Realty Trust (NYSE: VNO) has agreed to buy a retail condominium located at 666 5th Avenue in New York City for $707 million. The 114,000-square-foot asset further expands Vornado’s 2.2 million-square-foot portfolio of Manhattan street retail.  

The space acquired by Vornado houses popular retail clothing chains including Uniqlo, Hollister and watch company Swatch.

While this retail space has always had high value, the sellers, Crown Acquisitions Inc., Carlyle Group and Kushner Cos., achieved something truly unexpected with the $707 million sale. The property, which spans the length of an entire block, was valued at $525 million when Crown and Carlyle purchased a 49 percent stake in the building’s retail portion from Kushner in 2008.

Last March, Crown and Carlyle sold a portion of the space to Zara’s parent company, Indetix Group, for $324 million. The company turned the 39,000-square-foot storefront into a store for its Zara clothing chain Arteixo. The new Vornado deal, when combined with the Indetix deal, drives the value of entire Fifth Avenue block to more than $1 billion.

According to Bloomberg Businessweek, Vornado was encouraged to make this deal to appease shareholders after a reported 31 percent drop in funds from first quarter operations. The real estate investment trust expects to sell about $1 billion of assets by the end of 2012.

The transaction will also be funded with property level debt and is expected to close in the fourth quarter of this year.

Vornado’s stock price closed at $84.67 per share on Friday, down from $93.79 per share a year earlier.

— Krystle Drew