The Sitt-down: Eddie, Ralph and David settle years-long legal feud
His suit against Ralph and David is resolved, while Jack's remains
A family feud that may have cost the Sitt family their prime asset appears to be coming to an end.
Eddie Sitt has settled a long-running legal battle with his brothers Ralph and David over control of the family’s asset. But while the brothers have made peace, it may be too late for the family’s flagship property, the 354,000-square-foot building at 2 Herald Square, which is facing a foreclosure auction as soon as February.
Sitt Asset Management was founded in 2001 by the four Sitt brothers and their father (whose stake was later taken over by their mother, Marylyn), and was evenly split between the five of them. Litigation between Jack, the fourth brother, and David and Ralph is still ongoing.
“We’re obviously pleased to have settled with Eddie Sitt,” Stephen Meister, the attorney who represented Ralph and David, told The Real Deal. “At the end of the day, they are brothers, and we’re happy that the case was amicably settled.”
Jack filed the first lawsuit in November 2014, alleging that Ralph froze him out of Sitt Asset Management, and used funds from the family company to finance his own firm, Status Capital. Eddie filed a similar suit in February 2015 with the additional allegation that Ralph had forged documents which allowed him to effectively take control of 2 Herald Square. According to the complaint, Ralph’s forged documents allowed him to score a $30 million equity investment Ralph from Paramount Group without informing his brothers or the investors.
The leasehold on the 11-story building was the family’s prime asset, but it suffered numerous financial setbacks over the course of the legal tug-of-war, and is currently under foreclosure.
Back in 2007, the Sitts bought the 70-year leasehold for the prime office property for $500 million. At the time, the retail portion was leased to H&M and Victoria’s Secret, and two tenants, Publicis and Mercy College, occupied a sizable chunk of the office portion.
But by 2016 — with the legal battle still raging — H&M had moved out, leaving 59,000 square feet of unoccupied retail space, Victoria’s Secret lease was almost up, and the building was bleeding up to $1.7 million a month, according to court documents. In addition, the deadline on a $250 million loan on the property was fast approaching, but refinancing in the midst of a tug-of-war proved difficult.
In the spring of 2017, SL Green bought the defaulted $250 million loan, and a judge ruled that Paramount, as the preferred equity investor, could exercise its option to take over the leasehold. Paramount never acted on the option, and in November of that year, a judge ruled in favor of SL Green, ordering a sale of the leasehold.
Ralph and David continue to operate as Status Capital, the firm they founded in 2015. Ralph declined to comment, and neither Jack nor Eddie immediately responded.
Mark Maurer contributed reporting.