The Real Deal New York

Joe Sitt’s Thor finally closes on purchase of James hotel

Developer plans to relaunch hotel with different brand by 2019: sources
By Mark Maurer | Twitter_logo_blue copy December 14, 2017 04:55PM

From left: The James New York hotel, Joe Sitt and PGIM’s Eric Adler

Thor Equities finally closed on the purchase of the James New York hotel in Soho after a protracted legal battle with the seller, The Real Deal has learned.

Joseph Sitt’s firm, in partnership with multiple high-net-worth investors, paid $66.3 million for the 18-story, 114-key property at 27 Grand Street, according to sources familiar with the deal.

To close the purchase, Thor secured a $44 million floating-rate loan from French bank Natixis, sources said. The developer has hired fellow hotel investor Highgate as a third-party manager and plans to upgrade the food-and-beverage component and add two new hotel rooms, sources said.

The hotel will continue to operate as a James hotel until 2019, when it will be relaunched with a new brand, sources said.

The closing price is a step down from the $70 million it initially went into contract for in August 2016.The price reduction means an even bigger loss than expected for the seller, PGIM Real Estate, which bought the hotel for $83.4 million in 2013. PGIM, formerly known as Prudential Real Estate Investors, had acquired the property from Brack Capital Real Estate, which developed the hotel in 2010.

The deal is expected to mark the end of a year-long legal dispute between Thor and PGIM. The seller had accused Thor in December 2016 of breaching the contract.

The lawsuit centered on PGIM’s contract stipulation that Thor seek the approval of the transfer of the hotel’s liquor licenses from the New York State Liquor Authority and Community Board 2. PGIM claimed that Thor failed to do so, “intentionally engineering the failure of its applications” for a temporary retail permit. Thor then filed a motion to dismiss and, for much of this year, continued to pursue liquor license approvals. In August, the State Liquor Authority denied Thor’s application for permanent liquor licenses.

Shortly after, the parties moved toward a settlement and agreed to a new closing date of Dec. 14, records show.

JLL’s Jeff Davis brokered the sale, and his colleague Kevin Davis handled the financing. Jack Joe Sitt, son of Sitt and vice president at Thor’s new hospitality division Thor Hospitality Group, led the deal in-house.

A Thor spokesperson confirmed the closing, and PGIM and brokers declined to comment.

Elsewhere in Manhattan, the world’s tallest Holiday Inn recently hit the market, and Hong Kong-based Gaw Capital Partners bought the Standard High Line for $340 million. Natixis also provided the loan on the Standard High Line deal.