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BEVERLY HILLS, CA-The Festival Cos., an investment partner of Goldman Sachs, has acquired the 13,500-sf Gucci Building on Rodeo Drive for $40 million as the first investment by a new fund that plans to invest up to $800 million over the next three years. Mark Schurgin, fund principal and Festival Cos. president, says that the newly launched fund plans to invest in ground-up and existing retail properties from coast-to-coast.

Gucci is the sole tenant in the building at 347 N. Rodeo Dr. and has been in the space for about 20 years. The Festival Retail Fund bought the property from New York-based Friedman Equities in a transaction that was brokered by Jay Luchs of B Richard Ellis and a Cushman & Wakefield team of Steve Algermissen, Andrew Harper and Leslie Mayer.

The Festival Retail Fund, which launched on Jan. 1, is managed by Mark Schurgin and Rosalind Schurgin, who is EVP of the Festival Cos. The principals plan to invest in a broad spectrum of retail properties, including regional malls, lifestyle centers, power centers, community and strip centers and stand-alone buildings. They expect to reach the $800 million target by the end of 2009.

The Festival Retail Fund is part of a Festival Cos. organization that specializes in retail investment, development and management nationally through its Festival Commercial Real Estate Services, Festival Development, Inc., Landmark Commercial Group and Environmental Investments LLC. The Festival entities have developed and/or redeveloped and managed more than 110 retail properties nationwide over the last 25 years.

The Festival Cos. holdings and its leasing and management assignments total nearly 13 million sf, according to the company’s web site. Its assets and assignments include regional malls, power and promotional centers, community and neighborhood centers, lifestyle and specialty centers, entertainment centers and street-level retail properties. The company also owns office and medical buildings.

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