Manhattan office landlords are facing their fair share of troubles, but the owner of one Midtown West property is on defense against a tenant shaking the ground beneath it.
Soros Fund Management, asset manager for billionaire investor George Soros, filed a foreclosure lawsuit against the Eretz Group at 224 West 57th Street, Crain’s reported. Soros is accusing Eretz of defaulting on a $145 million mortgage and is looking to take the title of the building in order to sell it to pay off Eretz’s debt.
Soros alleges Eretz failed to pay off the loan’s principal by last June, the maturity date on the debt and two extensions of that deadline, according to the lawsuit.
The office space of the 10-story, 107,000-square-foot office building is fully occupied by Open Society Foundations, Soros’ grant-making group. Its lease runs through 2042, according to CoStar; the retail space is also fully leased.
The more likely culprit of Eretz’s struggles are high interest rates. In 2018, the landlord borrowed $145 million from Aarel Capital to refinance the building. When Aareal failed to collect on the outstanding debt, it sold the note to Soros in the fall, according to the lawsuit.
Eretz purchased the property in 2015 for $213.8 million.
Eretz declined to comment to Crain’s on the case. Soros did not return the outlet’s requests for comment.
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Wells Fargo earlier this month sued Eretz and its principal, Abraham Talassazan, on behalf of CMBS bondholders, looking to foreclose on 252 West 37th Street in the Garment District. The lawsuit alleges the principal failed to pay the principal and interest on the loan in January when it matured.
The occupancy rate at the 17-story Class B building dropped in the last decade to 62 percent as of September, down from 100 percent in 2014, according to data from Morningstar. The 140,000-square-foot building has an outstanding debt of $34.5 million, Morningstar data shows.