Wharton Properties modifies Times Square loans, initial $180M loan matured in 2021

UPDATED: Jeff Sutton’s Wharton Properties modified its securitized loan at the 25,600-square-foot retail building 1551 Broadway in Times Square, Manhattan, on April 1, 2024, two and a half years after the original $180 million loan matured, according to a source familiar with the transaction. The loan balance was reduced to $176 million.  The building has long been identified with fast-fashion retailer American Eagle, which signed a lease there in 2007 and opened in 2009.

The loan modification is another positive outcome at a Wharton Properties’ retail property that had been under financial pressure. In January, Jeff Sutton sold the retail at 717 Fifth Avenue to the Paris-based luxury retail conglomerate Kering for $963 million, That sale came about a year and a half after the lender New York Life Insurance, filed a pre-foreclosure action based on a maturity default. That loan matured in July 2022.

The initial loan at 1551 Broadway matured July 6, 2021, in a time when retail remained under pressure from Covid restrictions, and lenders were pulling back on financing, making it difficult to finance even cash-flowing properties. Credit markets still remain tight, and commercial lending remains at low levels in New York City and elsewhere.

The loan is bundled into the commercial mortgage pass-through certificates that make up the Goldman Sachs Commercial Mortgage Capital series 2011-GC5, also known as GSMS 2011-GC5.

The modification extends the loan for another approximately two years, modifies a mezzanine loan and has a short-term extension to the American Eagle lease. Brokers from Newmark advised on the transaction.

This modification was signed 18 months after the loan’s special servicer filed a pre-foreclosure action at the property, as PincusCo reported at the time.

The property includes a 250-foot-tall rentable LED signage tower with 12 separate screens and a total of 14,500 square feet on the three-story building.

Sutton in a 50-50 joint venture with SL Green Realty bought 1551 and 1555 Broadway for a total of $82.5 million, demolished the existing buildings and built the new retail with modern signage in 2009. Sutton bought out a portion of SL Green’s stake in 2008 and then the last 10 percent of the building in 2011.

The owner

The PincusCo database currently indicates that Wharton Properties owned at least 87 commercial properties with 212 residential units in New York City with 3,676,926 square feet and a city-determined market value of $1.9 billion. (Market value is typically about 50% of actual value.) The portfolio has $261.6 million in debt, with top three lenders as Valley National Bank, Bank of China, and Provident Bank respectively. Within the portfolio, the bulk, or 71 percent of the 3,676,926 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 surrounding

Within a 400-foot radius of 1553 Broadway, PincusCo identified six commercial real estate items of interests occurred over the past 24 months. Of those six items, one was in new building development. It was a new building permit issued on December 4, 2023 for a 112,862-square-foot hotel/dormitory/shelter (R-1) building with 401 residential units at 711 7th Avenue. Of those six items, two were sales above $5 million totaling $348.8 million. The most recent of the two was Apollo Global Management and Newbond Holdings which bought one condo unit in the 201,920-square-foot, three-unit mixed-use building (RC) on 2 Times Square for $165 million from Sherwood Equities on October 25, 2023. Of those six items, three were loans above $5 million totaling $141.3 million. The most recent of the three was McSam Hotel Group and Gene Kaufman in which borrowed $28 million from Maxim Capital Group secured by the 33,659-square-foot, 23-unit office building (O6) on 224 West 47th Street on March 18, 2024.

Direct link to the property’s ACRIS page and link to DOB NOW portal.