The Real Deal New York

Gulaylar sues GGP, Thor over sale of 685 Fifth

Turkish investment firm alleges breach of contract in $150M deal

From left: A rendering of 685 Fifth Avenue and Gulaylar Group’s Mehmet Gulay

The Gulaylar Group, the U.S. real estate development arm of a Turkish jewelry company, is suing a joint venture between General Growth Properties and Thor Equities over a soured $150 million deal to buy the office component of 685 Fifth Avenue.

Gulaylar claims that, since the contract of sale was signed last year, GGP and Thor made material changes to the building which lowered its value by as much as $40 million. 

The company also claims it was assured by GGP that the real estate investment trust could provide a $120 million bridge loan for the purchase through its lending arm, but the loan was rejected at the eleventh hour. On Jan. 30, GGP informed Gulaylar that it was in default on the contract and has allegedly been showing the building to potential third-party purchasers.

Gulaylar is asking a judge to hold up the contract or order GGP and Thor to release its $15 million deposit on the property.

An attorney for Gulaylar and a spokesperson for Thor declined to comment on the suit. A representative for GGP was not immediately available.

The 115,000-square-foot building is divided into two segments, a retail portion and a 90,000-square-foot office condominium. Gulaylar stepped in to buy the office component after a previous deal between Michael Shvo and the sellers was terminated. Gulaylar was initially planning to bring a hotel to the building, but later changed tack and decided to convert the offices into high-end condominiums.

GGP and Thor bought the building from fashion giant Gucci for $460 million in 2014, property records show.