Thor Equities Defaults on East Harlem Mixed-Use Buildings

Thor Equities is rounding out a rough year for its retail holdings with one more default. This time, the collateral is a twin set of mixed-use buildings with street-level storefronts in East Harlem.

Sitt quit making payments on the $51 million loan tied to 135 East 125th and 126 East 126th Streets late last month, driving the debt into imminent monetary default and special servicing, according to Trepp.

Thor Vice President Sam Sabin did not return a request for comment.

As with most of Thor’s distressed assets, the troubles in East Harlem appear to be retail-led. 135 East 125th and 126 East 126th comprise about 95,000 square feet of leasable space: the bulk is office, with one-fifth retail, according to Trepp.

At one point, the buildings boasted an IHOP in one corner frontage and a Duane Reade in the other. A Google Maps search shows the International House of Pancakes as of August had flown the coop, Duane Reade had shuttered, and Thor was marketing availability in both spaces.

Revenue in June was only covering about half of monthly mortgage payments, according to Morningstar.

A transfer to special servicing means workouts are on the table, and Sitt has some time to negotiate. The loan doesn’t come due for two more years. The question is whether the servicer will extend a second chance, and whether Thor will work towards a solution.

On other Thor properties, Sitt has thrown up his hands and lenders have preferred to foreclose.

The SoHo office-retail asset at 494 Broadway, for example, has been mired in foreclosure proceedings for nearly five years after Sitt said Thor would not cover debt service shortfalls or “critical bills,” according to Morningstar. The lender expects an auction by mid-2025.

Similarly, Sitt was “unable to submit a mutually acceptable settlement officer” after 115 Mercer, a condo-retail building in SoHo, landed in special servicing. Thor lost the building to foreclosure in 2022.

In 2024, two three-story Thor retail buildings went back to lenders at foreclosure auctions. Maverick Real Estate Partners took back 446 West 14th Street in the Meatpacking District. 440 Broadway in SoHo went to the bondholders on the $10 million CMBS debt.

And the Scribner Building at 597 Fifth Avenue is heading to auction after Thor “effectively abandoned” the historic retail asset, according to a receiver put in place after Sitt defaulted on a $111 million loan.

The sponsor now owes $140 million, fees and default interest included, according to a judgment of foreclosure and sale that hit court records Dec. 27.

All told, Sitt has nearly half a billion dollars in active securitized debt tied to New York buildings, all of them with some amount of retail. On more than half of it, the sponsor is dealing with some degree of distress.

Meanwhile, the firm has been active across other asset classes. It recently sold nine Brooklyn townhomes for $25 million — $2 million more than it paid for the portfolio a decade ago. This summer it picked up a Clinton Hill apartment building that once housed a Tootsie Roll factory at a hefty discount.

And on the industrial front, it just closed on the sale of an Amazon-leased Red Hook warehouse for about $7 million more than its asking price, according to a spokesperson for the firm.