Prada pays $425M to Wharton Properties for 724 Fifth, second part of $835M deal

Prada through the entity Prada USA Corp. paid $425 million to Jeff Sutton’s Wharton Properties through the entity 724 Fifth Fee Owner LLC for one retail and two office condominium units at 724 Fifth Avenue in Midtown West, Manhattan. This is the second of two transactions which total $835 million between the parties. In the first, Prada paid $410 million for 720 Fifth Avenue.
The deal closed on December 19, 2023 and was recorded on January 4, 2024. The three properties have 54,477 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $7,801 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 signatory for Wharton Properties was Jeff Sutton. The signatory for Prada was Maurizio Ciabatti. The contract date was December 19, 2023. Bloomberg reported on the 720 Fifth Avenue sale and the 724 Fifth Avenue sale last month. The brokers were Will Silverman and Gary Phillips of Eastdil Secured.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Prada purchased three properties in two transactions for a total of $410 million 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 10 properties in nine transactions for a total of $481.2 million over the same time period.

The property

The retail condo in Midtown West has 54,477 square feet of built space according to a PincusCo analysis of city data. The parcel has a total lot size of 13,648 square feet. The city-designated market value for the property in 2022 is $103.4 million. The most recent loan totaled $235 million and was provided by Aareal Capital on February 26, 2021.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have not received any significant violations 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 3rd highest sale turnover among other neighborhoods in the city with $2.8 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 the tax block of 724 5th Avenue, 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 Vornado Realty Trust, followed by Vida Shoes International and then Solow Realty & Development.
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 88 commercial properties with 190 residential units in New York City with 3,661,340 square feet and a city-determined market value of $1.8 billion. (Market value is typically about 50% of actual value.) The portfolio has $480.8 million in debt, with top three lenders as Aareal Capital, Valley National Bank, and Bank of China respectively. Within the portfolio, the bulk, or 71 percent of the 3,661,340 square feet of built space are office properties, with retail properties next occupying 18 percent of the space. The bulk, or 86 percent of the built space, is in Manhattan, with Brooklyn next at 10 percent of the space.

The buyer

The PincusCo database currently indicates that Prada owned at least one commercial property in New York City with 113,292 square feet and a city-determined market value of $150.6 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single office property. It is located in Manhattan.

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