The Real Deal New York

Thor Equities quietly marketing chunk of NYC commercial portfolio

Joe Sitt-led firm has been shopping at least 10 properties

May 31, 2016 06:02PM
By Katherine Clarke and Adam Pincus

Joe Sitt and his buildings at 530 and 590 Fifth Avenue

Joe Sitt and his buildings at 530 and 590 Fifth Avenue

Joe Sitt wants to strike while the iron is still hot.

Thor Equities, Sitt’s development and investment firm, is looking to sell off a sizable chunk of its prime commercial portfolio, The Real Deal has learned. Potential buyers have received set-ups on at least 10 Thor-owned properties over the past three months, sources said.

Properties include 1231 Third Avenue, 494 Broadway, 164 Fifth Avenue, 57-63 Greene Street, 155 Mercer Street and 25 West 39th Street. That’s in addition to the prime Fifth Avenue assets Thor is looking to sell such as 597 Fifth Avenue and 590 Fifth Avenue as well as the retail portion of 530 Fifth Avenue, which it co-owns with General Growth Properties.

Thor has tapped a number of different companies to sell the properties, including JLL, Eastdil Secured, Meridian Capital Group, CBRE and even Town Commercial, the commercial arm of Town Residential, which Sitt co-owns.

JLL is marketing 597 Fifth Avenue, while Eastdil and CBRE are marketing 530 Fifth and 590 Fifth, respectively, sources said. Meridian is marketing 57-63 Greene Street ,155 Mercer Street and 164 Fifth, sources said. Most of the agents were either unavailable or declined to comment on whether or not they were listing the properties.

But David Schechtman of Meridian, who is marketing the Greene Street property, said the sell-off narrative was overstated.

“I think Joe Sitt and his partners would be foolish not to exit at this time in the cycle given their basis in each of these properties,” he said. “It’s like the great Kenny Rogers once said: ‘You’ve got to know when to hold ’em. Know when to fold ’em.'”

A spokesperson for Thor declined to comment on why the company was selling so much at once, saying only that the firm “is proud to be an active global buyer and seller of properties, and to consistently deliver strong returns” to its investors.

While Thor isn’t necessarily always a long-term holder, sources said they’ve never seen the company try to sell off so much at once. Some speculated that Sitt was looking to gear his portfolio more heavily towards residential assets after failing to find retail tenants willing to meet his lofty retail rent projections, while others said he’s selling because some of his longtime partners are looking to exit their investments.

Investors in Thor’s previous funds include the University of Notre Dame, the John D. and Catherine T. MacArthur Foundation, the University of Michigan and the California State Teachers’ Retirement System. The University of Michigan contributed $20 million to Thor’s second fund in 2007, while CalSTRS took a $100 million stake in Thor Urban Retail Fund, an opportunistic fund that invests in urban retail.

Thor recently went into contract to sell an office-and-retail building at 693 Fifth Avenue, which is home to the Valentino store, for $525 million.  The deal, if it closes, would net Thor a sizable return on the $142 million it paid for the 105,422-square-foot building in 2010.

Over the past two years, the firm has made large bets on the residential market. In January 2015, it went into soft contract to buy the Caiola family’s rental portfolio for nearly $800 million, but later lost the deal to the Blackstone Group. Its recent purchases include the Apthorp on the Upper West Side, which it partnered with Michael Fascitelli to buy for $120 million.  They’ve also been making a string of single-building purchases in Upper Manhattan.

Market insiders said the sell-off of retail properties, particularly those with vacant space, was a sign that the retail market was past its peak, a theme which repeatedly surfaced at this year’s ICSC RECon event. RKF CEO Robert Futterman recently described the market as one “that needs a serious correction in retail.”

One major retail investor who is a close observer of Sitt said that at one time, retailers were willing to “operate at a loss and write his big rents off as a marketing expense. “This is a fairly conclusive sign that the retail market has topped off. If he’s willing to sell these properties without leasing the retail,” the source said, referring to the fact that some buildings like 530 Fifth had long-vacant store space, “it’s definitely the top of the market.”

Correction: In a previous version of this story, The Real Deal identified Meridian as the broker marketing 1231 Third Avenue. The company is not marketing the building.

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