Wells Fargo files $23M pre-foreclosure at Garment District retail

Wells Fargo filed a $23 million pre-foreclosure action against the owners of a six-story retail property at 11 West 34th Street in the Garment District, Manhattan, just over a year after the loan matured but was not paid off.

The 17,153-square-foot property with 25 feet of frontage on West 34th  Street between Fifth and Sixth avenues, is owned by a joint venture composed of an entity that includes Richard Cohen as a member, Ten Nissan LLC, which owns 40 percent of the property; an entity in the care of Jeff Sutton’s Wharton Properties, 11 West 34th Street Member LLC, that owns 30 percent; and an entity affiliated with the public company SL Green Realty, 11W34 Investor LLC, which also owns 30 percent.

The filing comes at a time of tight credit, when lenders are reluctant to finance retail properties. However, despite that trend, borrowers such as Jeff Sutton have struck deals to extend loans that were previously in a maturity default. For example Sutton executed a loan modification at 1551 Broadway at a $180 million loan on the same day that Wells Fargo filed this action, as PincusCo reported.

The retailer Foot Locker occupies the building as the sole tenant.

Sutton owns several other properties on this block, the adjacent 15 West 34th Street, 21-25 West 34th Street, 27-29 West 34th Street and 40 West 34th Street.

Wells Fargo filed the complaint on April 1, 2024, in New York State Supreme Court in Manhattan, under index number 850106/2024. LINK

The lender sent a letter in February 2023 declaring the loan was in default.

Members of the Cohen family of Conway Stores have owned the parcel since the mid-1980s. In December 2010, the prior Cohen family entity transferred ownership into the current owner entity, at the time borrowing $18 million from Wells Fargo. They upped the debt to $23 million in December 2015. That loan had an initial maturity date of January 1, 2021, but that was extended to January 1, 2023.

The block

On this tax block, PincusCo has identified the owners of 12 of the 16 commercial properties representing 1,309,345 square feet of the 1,462,940 square feet. The largest owner is Bldg Management, followed by Icecap Group and then Michael Cohen. On the tax block, there was one new building construction project filed totaling 173,835 square feet. It is a 363-unit, 173,835 square-foot hotel/dormitory/shelter (R-1) building submitted by Wharton Properties and filed by Andrew Lester with plans filed April 29, 2021 and it has not been permitted yet.

The surrounding

Within a 400-foot radius of 11 West 34 Street, PincusCo identified three commercial real estate items of interests occurred over the past 24 months. Of those three items, three were loans above $5 million totaling $51 million. The most recent of the three was Yosef Nazar who borrowed $12 million from Bank Hapoalim secured by the 12,285-square-foot, eight-unit office building (O6) on 36 West 36th Street and two other properties on May 15, 2023.

Direct link to the property’s ACRIS page.