Prada pays $410M to Jeff Sutton’s Wharton Properties, part of $835M Fifth Ave. deal

The family of fashion designer Prada paid $410 million to Jeff Sutton’s Wharton Properties for the retail and office building at 720 Fifth Avenue in Midtown West through two transactions. In addition, Bloomberg reported that the company Prada bought the adjacent building, 724 Fifth Avenue, for $425 million on the same day, bringing the total to $835 million. The 724 Fifth Avenue sale has not been recorded in public records as of publication. The Prada family is the majority owner of the Prada company.
Bloomberg reported on the 720 Fifth Avenue sale and the 724 Fifth Avenue sale last month.

In the first of the two 720 Fifth Avenue sales, Prada through the entity 720 Fifth USA, LLC paid $397.4 million to Wharton Properties through the entity 720 Fifth Sub A LLC for the office building (O6) at 720 Fifth Avenue in Midtown West, Manhattan.
The deal closed on December 19, 2023 and was recorded on January 3, 2024. The property has 113,292 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $3,507 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The seller bought the property on October 20, 2006, for $153 million. The signatory for Wharton Properties was Jeff Sutton. The signatory for Prada was Maurizio Ciabatti. The contract date was December 19, 2023. Will Silverman and Gary Phillips of Eastdil Secured brokered the sale.

In the second transaction for 720 Fifth Avenue, Prada through the entity 720 Fifth USA, LLC paid $12.6 million to Wharton Properties through the entity JS Annex, LLC for the retail condo at 730 Fifth Avenue in Midtown West, Manhattan and property at 730 Fifth Avenue in Midtown West, Manhattan. The deal closed on December 19, 2023 and was recorded on January 3, 2024. The signatory for Wharton Properties was Jeff Sutton. The signatory for Prada was Maurizio Ciabatti.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Prada had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Wharton Properties purchased five properties in three transactions for a total of $16.6 million and sold seven properties in seven transactions for a total of $71.2 million over the same time period.

The property

The office building 720 Fifth Avenue in Midtown West has 113,292 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 50 feet and is 125 feet deep with a total lot size of 7,552 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $150.6 million. The most recent loan totaled $225 million and was provided by JPMorgan Chase on May 25, 2021.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received $1,125 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Midtown West, The majority, or 75 percent of the 75.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 14 percent of the space. In sales, Midtown West has the 5th highest sale turnover among other neighborhoods in the city with $2.4 billion in sales volume in the last two years. For development, Midtown West is the most active neighborhood among other neighborhoods. It had 19.1 million square feet of commercial and multi-family construction under development in the last two years, which represents 25 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of nine of the 23 commercial properties representing 1,104,059 square feet of the 1,557,159 square feet. The largest owner is Wharton Properties, followed by Vornado Realty Trust and then Vida Shoes International.
On the tax block, there was one new building construction project filed totaling 383,134 square feet. It is a 80-unit, 383,134 square-foot residential (R-2) building submitted by Solow Realty & Development and filed by Anthony Calicchio with plans filed April 17, 2018 and it has not been permitted yet.

The majority, or 69 percent of the 1.6 million square feet of built space are office buildings, with elevator buildings next occupying 19 percent of the space.

The seller

The PincusCo database currently indicates that Wharton Properties owned at least 89 commercial properties with 190 residential units in New York City with 3,774,632 square feet and a city-determined market value of $2 billion. (Market value is typically about 50% of actual value.) The portfolio has $705.8 million in debt, with top three lenders as Aareal Capital, JPMorgan Chase, and Valley National Bank respectively. Within the portfolio, the bulk, or 72 percent of the 3,774,632 square feet of built space are office properties, with retail properties next occupying 17 percent of the space. The bulk, or 87 percent of the built space, is in Manhattan, with Brooklyn next at 10 percent of the space.

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