Jeff Sutton sells 717 Fifth retail for $963M to Kering

UPDATED: Jeff Sutton of Wharton Properties sold the 115,000-square-foot retail at 717 Fifth Avenue in the Plaza District for $963 million to the publicly traded Paris-based fashion brand, Kering. The sale closed today, January 22, 2024, according to a news release from the buyer. The retail space is currently occupied by Armani and Dolce & Gabbana.

Kering owns  luxury fashion brands such as Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni and more.

The existing $300 million loan was in a maturity default, and the lender filed a pre-foreclosure action in 2022. However, this sale is more than three times the prior loan.

This sale comes four weeks after Sutton sold 720 and 724 Fifth Avenue to fashion retailer Prada in two transactions, for $410 million and $425 million, totaling $835 million.

Will Silverman and Gary Phillips of Eastdil Secured advised Jeff Sutton on this deal, as well as the Prada deals.

The sales underscore the demand from retailers to buy their locations, which has occurred at both the luxury end as well as the lower-priced end. Retailers — or the families that own the brands — that have purchased in the city in the past two years include Dyson (once where Sutton was a seller) and Akris, and lower-tier brands such as Raymour & Flanigan and even entertainment companies like Comedy Cellar.

Sutton has owned the property for about 20 years. In 2004, Lloyd Goldman, Jeffrey Feil, Jeff Sutton and Stanley Chera bought the retail portion of 717 Fifth Avenue for $200 million, while the office went to Sam Zell’s Equity Office. In 2006, Sutton bought out the partners’ 34 percent stake for $24.9 million and SL Green acquired a 32.75% stake. Now, SL Green owns a 10.92% stake, following the purchase of the majority of its stake by Sutton in 2012. in 2007, Sutton paid Hugo Boss $25 million to buy out the lease to replace it with the higher paying tenant, Armani.

In August 2022, New York Life Insurance Company filed a pre-foreclosure action against retail investor Jeff Sutton and partner SL Green Realty in New York State Supreme Court in Manhattan alleging that the loan it provided in 2012 with an original principal of $300 million that was secured by a retail condominium unit and a smaller office condo unit at 717 Fifth Avenue was in a maturity default, with the 10-year loan’s maturity date set for July 10, 2022, and it has not been repaid. On July 25, the lender sent a notice to Sutton that the loan was in default, and noted the parties had signed a pre-negotiation agreement April 19, 2022. The retail units cover approximately 123,000 square feet.

Anbang Insurance Group, who’s assets are now controlled by the government of China, bought the office condo portion of the building for $415 million in 2015, and it is not involved in this litigation.

Sutton is one of the city’s largest retail owners, with nearly 100 properties around the city.