Thor Equities is in a very precarious position at 597 Fifth

The owner needs another high-paying tenant to make mortgage payments to SL Green

The 597 Fifth Avenue Lululemon storefront (Credit: Google Maps)
The 597 Fifth Avenue Lululemon storefront (Credit: Google Maps)

Lululemon’s departure from 597 Fifth Avenue could put Thor Equities in a pickle.

The retailer’s impending vacancy again puts landlord Thor Equities in danger of having to hand over the property to lender SL Green Realty, according to Crain’s. Without a high-paying tenant to replace Lululemon, the property might not generate enough income to cover its mortgage payments. SL Green has a $25 million mezzanine loan and another lender has a $10 million mezzanine loan. SL Green collects 9.3 percent on its financing. Joe Sitt’s real estate firm bought the property for $108.5 million in 2011.

Thor has had a tough time with the building after cosmetics retailer Sephora left in 2017. Lululemon came in after, signing a short-term lease. The retailer plans to move into a 20,000-square-foot space at nearby 592 Fifth Ave.

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FIfth Avenue has been hit hard by the retail slump. The average asking rent on the avenue between 42nd Street and 49th Street fell to $996 per square foot in the fourth quarter of 2018, according to Cushman & Wakefield. That’s 12.5 percent lower than a year earlier. The availability rate, which measures current and expected vacancies, fell to 23.3 percent from about 34.5 percent a year earlier.

SL Green seized another Thor property last year — a 34-unit rental apartment building at 1231 Third Ave. The lender held a mezzanine loan against that building as well. Thor paid $52.5 million for it in 2013. It was previously reported that Thor was looking to offload its Fifth Ave properties. [Crain’s] — Meenal Vamburkar