Jeff Sutton lands $90M refi for Madison Ave Gold Coast property

Balloon payment of $90M principal now staved off until 2022

Jun.June 20, 2019 12:16 PM
Jeff Sutton and 747 Madison (Credit: Google Maps)

Jeff Sutton and 747 Madison (Credit: Google Maps)

A month after a $90 million balloon payment was set to come due, Jeff Sutton’s Wharton Properties has refinanced the retail space at 747 Madison Avenue for three more years.

The retail magnate secured a $90 million refinancing package from JP Morgan Chase for the property, currently home to Givenchy and Alexander McQueen, according to Tel Aviv Stock Exchange filings and New York City property records. The new debt replaces a previous loan from Goldman Sachs for the same amount, which was provided in 2014.

Representatives for Wharton did not immediately respond to requests for comment. JP Morgan Chase declined to comment.

Wharton currently values the property at $250 million, according to Tel Aviv Stock Exchange filings.

Like the Goldman loan it is replacing, the refinancing from JP Morgan is a balloon mortgage with the entire principal due at maturity, now set for 2022. The prior debt had an initial three-year term with two one-year extension options, both of which were exercised, bringing the final maturity date to May 9 this year. The new loan does not have extension options.

Last month, Wharton notified Israeli bondholders that it had secured a one-month extension to the Goldman loan, as it was in the process of arranging a refinancing. The loan was then extended by one more week to Tuesday, when the new JP Morgan mortgage came into effect.

Sutton and partners SL Green Realty and Harel Insurance picked up the ground-floor retail space at the Colony House co-op building for $66.25 million in 2011, as then-tenant Valentino was nearing the end of a 10-year lease. The partners then picked up a second-floor duplex unit for $2.6 million the following year, and merged it with the ground floor unit to create a second high-ceilinged storefront.

In 2013, Sutton bought out SL Green and Harel’s respective one-third stakes in a deal that valued the property at about $160 million. Givenchy and McQueen both signed 15-year leases at the property that year.

In conjunction with SL Green’s sale of its stake, the company made a $30 million preferred equity investment in the property, which Sutton bought out in 2017 using proceeds of a $100 million bond raise in Tel Aviv.

The new loan from JP Morgan comes with somewhat more favorable interest rates than the debt it is replacing – LIBOR plus 1.25 percent (3.64 percent at present), versus LIBOR plus 1.75 percent on the Goldman loan. As a personal guarantor of the loan, Sutton is required to maintain a net worth of at least $2 billion. Forbes currently estimates his net worth to be $4.3 billion.

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