The Real Deal New York

Sitt Asset shopping leasehold at
2 Herald Square

Litigation held up the refinancing of a $250M loan
April 27, 2017 09:45AM

From left: 2 Herald Square, Jack and Eddie Sitt

Sitt Asset Management is reportedly shopping its leasehold interest at 2 Herald Square, where the company’s $250 million loan has been on the brink of default.

Sitt Asset Management owns a 51.75 percent controlling interest in the property, split five ways between four Sitt brothers and their mother. The 354,000-square-foot property at 1328 Broadway is valued at at least $500 million.

The brothers tapped Cushman & Wakefield to market the interest, Real Estate Alert reported.

The Sitt brothers had been trying to refinance a $250 million loan on the property, set to mature April 11, The Real Deal previously reported. The CMBS loan from Wells Fargo had been sent to special servicing due to “imminent maturity default,” according to Trepp.

But ongoing litigation between family members made it difficult to secure a loan.

In May 2016, Eddie and Jack Sitt sued Ralph, as manager, claiming that he was “starving the property” and intending to dilute the members’ interests, according to court documents.

The 12-story building has 100,000 square feet of retail, which is 82 percent occupied after a shakeup last year. In January 2016, H&M vacated a 31,000-square-foot retail space, which has yet to be filled. In August, Publicis New York left a 122,000-square-foot space and is being replaced by the office-sharing company WeWork.

Net operating income on the property to plummet to $3.1 million in 2016 from $17.1 million in 2015, Real Estate Alert reported. — E.B Solomont

(To see WeWork’s office leasing Deal Sheet, click here)