SL Green acquires 2 Herald Square leasehold

Property's lender bid around $270M: sources

New York /
May.May 10, 2018 12:30 PM

2 Herald Square and Marc Holliday

After a lengthy battle among several investors, SL Green Realty acquired the leasehold for the troubled Midtown office building 2 Herald Square, The Real Deal has learned.

SL Green, the property’s lender, announced Thursday it had successfully bid on the leasehold interest, which it was in the process of foreclosing on. The real estate investment trust also said it reached an agreement with an Israeli partner, but did not disclose the identity or the purchase price.

According to sources familiar with the property, the bid was somewhere around $270 million, accounting for the $250 million first mortgage that SL Green bought in May 2017 as well as accrued interest and roughly $10 million in transfer taxes.

Although SL Green claims it was a “successful bidder” for the leasehold, sources said there were no other bidders. The auction was not marketed to outside investors. SL Green had been considering taking control of the asset since it bought the debt last year.

SL Green declined to comment.

The Sitt family’s Sitt Asset Management, which bought the 70-year leasehold for $275 million in 2007, no longer has any equity in the property. The family had been immersed in a legal feud at the same time it was scrambling to find a ground-floor retail replacement for H&M and sell the leasehold to an investor. (One of those lawsuits, between Eddie and his brothers Ralph and David, was settled in January.)

The 369,000-square-foot property is home to Victoria’s Secret, Mercy College and a WeWork space largely occupied by Amazon. The building has had a string of high-profile owners such as Harry Helmsley and Aby Rosen and seen periods of both neglect and aggressive investment.

The leasehold has nearly fallen into the hands of several different would-be buyers over the past year, from JEMB Realty and Jamestown nearing an outright purchase to preferred-equity investor Paramount Group negotiating to take control. Then, in November, after those deals fell through, a New York State Supreme Court judge granted summary judgment in favor of SL Green over the mortgage and ordered a sale of the leasehold.


Related Articles

arrow_forward_ios
The Daily News Building at 220 East 42nd Street and SL Green CEO Marc Holliday (Credit: Getty Images)
SL Green puts Daily News building up for sale
SL Green puts Daily News building up for sale
SL Green snags private-equity firm at One Vanderbilt
SL Green snags private-equity firm at One Vanderbilt
SL Green snags private-equity firm at One Vanderbilt
SL Green’s locks in big bank lease at Hudson Yards redevelopment site
SL Green’s locks in big bank lease at
Hudson Yards redevelopment site
SL Green’s locks in big bank lease at
Hudson Yards redevelopment site
Apollo Global Management will take over craft retailer Michaels in a deal that values the company at $3.3 billion. (Wikipedia Commons, iStock)
Craft retailer Michaels to go private in $5B deal
Craft retailer Michaels to go private in $5B deal
 JLL CEO of capital markets Richard Bloxam and Roofstock CEO Gary Beasley (JLL, Roofstock, iStock)
JLL gets in rental home business
JLL gets in rental home business
Mack-Cali Realty CEO Mahbod Nia and MaryAnne Gilmartin (Photos via Mack-Cali Realty)
Mack-Cali Realty names Mahbod Nia as CEO
Mack-Cali Realty names Mahbod Nia as CEO
The comedy club argues that if SNL can operate, then they should be allowed to operate too. (Getty)
Manhattan comedy club sues Cuomo over pandemic closures
Manhattan comedy club sues Cuomo over pandemic closures
(iStock)
These were Manhattan’s best office submarkets in Q4
These were Manhattan’s best office submarkets in Q4
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...