Jeff Sutton is facing possible foreclosure on another marquee Midtown property.
Deutsche Bank filed a foreclosure action Friday on behalf of CMBS bond holders, alleging that an entity tied to Sutton’s Wharton Properties defaulted on a $180 million loan at 1551-1555 Broadway, the site of American Eagle’s 25,000-square-foot flagship store in Times Square.
The bank claims that 1551 Broadway Owner LLC, which lists the same address as Wharton Properties, now owes nearly $182 million, including the original loan amount and accrued interest and fees.
Citigroup originated the $180 million financing in June 2011, according to the lawsuit, which alleges that Sutton partially guaranteed the loan.
Sutton did not immediately respond to a request for comment. A source with knowledge of the situation said Wharton Properties is working things out with a special servicer despite the foreclosure suit. Pincusco first reported the foreclosure filing.
According to the lawsuit, the loan matured in July of last year, triggering a default. Deutsche Bank and the Wharton entity reached a forbearance agreement in September 2021, allowing the borrower until November of last year to pay back the balance.
When Sutton’s firm failed to repay the debt by that deadline, the loan was deemed in default, according to Deutsche Bank, which has asked the court for a judgment of foreclosure and sale of the property.
A Fitch ratings report published Sept. 9 noted that the Wharton entity “continues to evaluate options” to either refinance the loan or sell the property according to a Fitch ratings report issued last month.
The filing comes just over a month after New York Life Insurance Company filed a foreclosure action on the retail property at 717 Fifth Avenue, accusing an entity tied to Wharton Properties and SL Green of defaulting on a $300 million loan.