Thor, GGP to close on $85M Midtown retail deal in June

Thor Equities and General Growth Properties are set to close in June on the $85 million purchase of a landmarked Midtown retail building that’s the subject of ongoing litigation, sources told The Real Deal.

The four-story, 22,000-square-foot property at 220 West 57th Street, located between Broadway and Seventh Avenue, is the longtime home of Lee’s Art Supplies. By early June, the Steinberg family’s art shop, which fully occupied the building, is planning to move out. The exit makes way for significant development potential, given the site’s 126,000 buildable square feet.

Even as the deal nears closing, a lawsuit persists. Investor Joseph Safdieh’s Safka Holdings entered contract to buy the building for $65 million in 2013. GGP turned down his offer to join the deal as a partner, investor or lender because the price was too high, Safdieh alleges.

Safdieh also claims he sought an extension to pay the $5 million deposit, but the sellers would not grant it. He then sued the Steinberg family, but that suit was dismissed and the contract was terminated.

In April 2014, Thor entered contract on the property for $85 million – and soon brought on GGP as a joint-venture partner. Safdieh filed another suit, this time claiming Thor and GGP participated in a “conspiratorial agreement” that left him cheated out of the deal.

Thor is no longer a defendant in the case, but GGP still is. In September 2015, a judge granted a motion to dismiss all claims against Thor. A motion to dismiss claims against GGP was partially granted. The Chicago-based real estate investment trust continues to face allegations of breach of contract.

The next status conference is set for May 10, according to court records.

The property was constructed in 1897 and was known as the Society House of the American Society of Civil Engineers. The Steinberg family opened their business across the street from it in 1951 before moving to 200 West 57th Street in 1975. The family acquired the building in 1995, according to the store’s website.

Lee’s Art Shop has no plans to open a new store elsewhere at this time, DNAinfo reported.

Lawyers for Thor and GGP declined to comment, while Safdieh’s lawyer couldn’t be reached.

Thor is in the process of selling several Midtown properties, including the office component at 685 Fifth Avenue — with GGP — and the full office-and-retail building at 693 Fifth Avenue. The building on West 57th Street is directly across from the site of Extell Development’s 1,500-foot condominium supertall Central Park Tower.