The Real Deal New York

Sutton buying SL Green’s $100M investment in 530 Broadway

Package includes mezz loans and preferred equity
By Chava Gourarie | March 12, 2018 05:20PM

From left: Jeff Sutton, Marc Holliday and 530 Broadway

Jeff Sutton’s Wharton Properties is taking over SL Green Realty’s $100 million investment in a trio of Soho properties, according to documents filed with the Tel Aviv Stock Exchange on Sunday.

Through a joint venture, Wharton and SL Green bought the 11-story office-and-retail buildings at 530-536 Broadway for $340 million in 2014.

Now, Sutton’s firm is acquiring the $60 million in mezzanine loans and $40 million in preferred equity that SL Green had provided at the time of the acquistion. Sutton will finance the purchase with the proceeds from bonds raised in Tel Aviv in early 2017.

The deal will not affect the companies’ shares in the venture: The real estate investment trust is retaining its 20 percent stake, according to the TASE documents. Wharton holds a 50 percent stake and an unnamed third partner owns the remaining 30 percent.

The two mezzanine loans and the preferred equity deal expire in March 2019, along with a $200 million senior loan from Morgan Stanley.

The property, which spans 194,500 square feet, is valued at $480 million and has a net operating income of $16.7 million, Wharton’s financial reports indicate. The firm is in talks with a new tenant, according to the documents, which will bring the property to almost 100 percent occupancy and raise the NOI to $19.7 million. It is currently 77 percent occupied and current tenants include Vince Camuto, Club Monaco, and Skechers.

In 2016, Wharton and SL Green put the buildings on the market, asking around $450 million.