Sitt Brothers Settle 2 Herald Square Lawsuit As Foreclosure Auction Looms
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The brothers that make up Sitt Asset Management's ownership have settled their lawsuits against each other, though perhaps too late to retain possession of the company's flagship asset.
The company announced it had reached settlements in two lawsuits between the brothers: one in which Jack Sitt claimed that Ralph and David Sitt had wrested control of the company away and funneled money into their separate venture, Status Capital, and one in which Eddie Sitt made a similar claim but also alleged Ralph and David made unilateral decisions in the financing of 2 Herald Square, The Real Deal reports.
According to Eddie's suit, Ralph forged documents that gave him control of the office-and-retail building in Herald Square before securing a $30M equity investment from Paramount Group.
Sitt Asset Management had purchased a 70-year leasehold on 2 Herald Square in 2007, but with H&M's departure from part of the retail portion and Victoria's Secret's lease for the rest soon to expire, the asset had become a money-loser and Sitt failed to repay a $250M CMBS loan in time. SL Green purchased the defaulted loan and Paramount was granted the right to take over the leasehold, but Paramount never exercised it.
A judge has ordered a foreclosure auction for the sale of the leasehold, which may take place as soon as February, unless the Sitt brothers can pull off something unexpected. Despite its troubled financial status, the 11-story building has considerable value, in part due to Amazon leasing the entirety of WeWork's 122K SF location in the office portion. Amazon is also in talks to open a brick-and-mortar location on the ground floor, which would further stabilize the building's value.