The Real Deal New York

Sutton, Sitt score $305M refi for
530 Broadway

Morgan Stanley issued the floating-rate loan
By David M. Levitt | October 17, 2018 01:30PM

Clockwise from top left: Jeff Sutton, 530 Broadway, and Joseph Sitt (Credit: Thor Equities)

Jeff Sutton’s Wharton Properties and Joseph Sitt’s Thor Equities have nabbed a $305 million floating-rate loan on 530-536 Broadway, a trio of 11-story office and retail properties in Soho.

The refinancing was issued by Morgan Stanley, according to JLL’s Aaron Appel, who arranged the debt deal on behalf of the Thor and Wharton alongside colleagues Michael Diaz, David Sitt and Eliott Zeitoune. The loan, whose rate is tied to LIBOR, is for three years with two 1-year options, Appel said.

“This shows that there is liquidity for assets that are well-located in New York City,” Appel said. We had over 11 offers from groups to finance the asset. There was a substantial market.”

The 201,000 square-foot block of buildings consists of roughly 177,000 square feet of offices, with the remainder ground-floor retail space, with tenants including Sketchers and Club Monaco. The retail is fully occupied, and the offices are upward from 95 percent occupied with a recent lease by Knotel, Appel said.

In March, The Real Deal reported that Sutton’s firm was taking over SL Green’s $100 million investment in 530-536 Broadway, using proceeds from bonds sold on the Tel Aviv Stock Exchange. Appel said that deal is now closed, though SL Green retains an ownership position in the property.

“The purpose of the loan was to refinance the existing debt on the asset, which included an existing first mortgage and $100 million of (mezzanine) debt purchased from SL Green, and to lower the cost of funds substantially,” he said. “They cut the overall interest rate dramatically.”

Sitt’s Thor paid $190 million for the buildings in 2007. And in 2014, a joint venture led by Sutton acquired them for $326 million, with the partners picking up a $200 million mortgage from Morgan Stanley and the investment from SL Green. In 2016, the buildings hit the block with an asking price of about $450 million, but are no longer being marketed for sale.