UPDATED, 10:47 a.m., June 19: There’s a new twist in the drama for control over 2 Herald Square, with a representative for Eddie Sitt claiming that there’s a $370 million offer in place from Alpha Equity Group for the struggling property.
“Eddie Sitt has re-asserted his authority as the proper manager and secured an offer with a $370 million valuation,” Morrison Cohen LLP’s Christopher Milito, who represents Eddie, told the Commercial Observer.
The deal with Alpha Equity, a little-known investment group led by William Segal, would pay off the feuding Sitt brothers’ debts and preserve some equity to investors, according to CO. “We are hopeful that all of the Sitt brothers will work together to avoid the scenario that prior offers contemplated: a wipe-out of the investors’ equity,” Milito said.
The reported offer comes just days after The Real Deal reported that Paramount Group is poised to take control of the leasehold of the building. Sources told TRD the Midtown-based real estate investment trust led by Albert Behler would increase its stake in the property from the $30 million preferred equity interest it currently holds. Jamestown Properties and Morris Bailey’s JEMB Realty are also said to be in the running for the property.
Paramount is “bleeding money” to the senior debt holders, a source told CO.
Sitt Asset Management paid $270 million for the leasehold on the 11-story, 354,000-square foot property in 2007. The four brothers — Eddie, Jack, Ralph and David — and their mother jointly own a 51.75 percent interest in the leasehold. A family dispute and continuing legal feuds between the brothers has stymied refinancing efforts. Earlier this year, SL Green Realty purchased the $250 million leasehold mortgage on the property Which Court records show has been losing $1.7 million per month.
Stephen Meister, an attorney for Ralph Sitt, said he was “highly doubtful” that Alpha’s $370 million offer is legitimate.
“This is not the first time Eddie Sitt has come up with a bogus offer,” Meister said. “In February, Mr. Milito gave us another offer for $100 million more than the Alpha Equity offer and it went nowhere.” Meister added that Alpha’s offer was “contingent on the buyer being granted consent by the holders of the first mortgage, SL Green, and the preferred equity, Paramount, to assume those obligations, and I have my doubts that either company will consent.”
Alpha Equity recently wanted to build a 600-unit luxury senior housing development on Staten Island, but the plans were opposed by community members, according to CO.
[CO] — Miriam Hall
This story was updated to include a statement from Ralph Sitt’s attorney.