The Real Deal New York

SL Green nabs $150M loan for 2 Herald Square

MUFG Union Bank provided the mortgage
By David Jeans | November 16, 2018 05:00PM

SL Green’s Marc Holliday and 2 Herald Square (Credit: SL Green and Property Shark)

SL Green Realty has landed a $150 million loan for 2 Herald Square, which the firm acquired the leasehold of through a foreclosure auction.

MUFG Union Bank, which previously provided a $25 million gap mortgage on the 369,000-square-foot property, provided the real estate investment trust with the new financing.

It is unclear how the new loan will be used. SL Green did not immediately respond to a request for comment.

SL Green had bought the property’s $250 million first mortgage in May 2017. Eventually, the company moved to foreclose and acquired the leasehold for roughly $270 million in May 2018.

The building had long been the crown jewel of the Sitt family’s Sitt Asset Management, which paid $275 million for the leasehold in 2007. The four Sitt brothers — Jack, Ralph, Eddie and David — eventually descended into a legal battle. Ralph was targeted by separate lawsuits filed by Jack and Eddie in 2014 and 2015, alleging that he had forged documents to take control of 2 Herald Square, while freezing Jack out of Sitt Asset Management, and using funds from the family company to finance his own firm, Status Capital. Eddie settled the suit with his brothers in January.

The property faced financial troubles during the litigation, and other investors were interested in taking control of the building. That included JEMB Realty, preferred-equity investor Paramount Group and Jamestown, which sought an outright purchase.

The building, which is anchored by Victoria’s Secret and also contains WeWork and Mercy College, has previously been owned by Harry Helmsley and Aby Rosen. The WeWork space is largely occupied by Amazon, which just announced it would bring half of its second headquarters to Long Island City.

Elsewhere, SL Green went into contract last month to sell its fee interest in 1231 Third Avenue and 31,000 square feet of development rights, as well as an assemblage at 252-254, 257, 259 and 260 East 72nd Street for a total of $144 million.