Vacancies at properties such as 597, 590 and 530 Fifth Avenue could be pushing the landlord close to defaulting on his loans, Crain’s reported.
“Sitt could have problems because he bought at prices no one else would pay,” said Colliers International retail specialist Brad Mendelson.
Thor is certainly not the only property owner battling a cool retail market. Vacancy rates on Fifth Avenue between 42nd and 49th streets reached a high of 31 percent last year. And 8 of the 11 Manhattan retail neighborhoods tracked by Cushman & Wakefield saw availability rates climb between .6 percent and 8.2 percent.
Thor last year began shopping around a sizable chunk of its commercial portfolio. The 10 properties included retail spots in Soho and Midtown, as well as spaces on prime Fifth Avenue.
But the slumping retail market could put Sitt in a bind.
At 597 Fifth Avenue, which Thor bought for $108.5 million in 2011, the landlord has struggled to bring in a high-paying tenant after to replace the cosmetics company Sephora. A deal with the chocolatier Godiva recently fell through.
Sources told Crain’s that without a retail tenant, the property may not generate enough cash to cover its debts, which include a mezzanine loan with SL Green Realty.
SL Green also has a mezzanine loan on 590 Fifth, which Thor bought in 2007 for $90 million. The company planned to convert the first and second floors from an AT&T store and a bi-level souvenir shop into a flagship retail box, but failed to find a tenant.
“Joe had a grand plan for the retail, but he has decided to sell,” said CBRE’s Bill Shanahan, who is shopping the property. “Even at today’s price, he still has a large embedded profit that he will realize through a sale.”
Shanahan said Thor is entertaining offers ranging from $140 million to $150 million on 590 Fifth, down from an asking price of $170 million last year.
At 530 Fifth, Sitt and his partner General Growth Properties have been unable to fill half of the 100,000 square feet of retail they own at the base of the office building between West 44th and West 45th streets. [Crain’s] – Rich Bockmann