Sternlicht's LNR Moving To Foreclose On 2 Of Thor's Manhattan Properties
Thor Equities is facing another attempt by a lender to force a sale or takeover of high-profile Manhattan retail properties it owns.
LNR Partners, a subsidiary of Barry Sternlicht's Starwood Property Trust, and Wilmington Trust have initiated pre-foreclosure proceedings against Joe Sitt's real estate firm, asking a court to force Thor to sell 597-599 Fifth Ave. and 3 East 48th St., PincusCo reports. The pair is also seeking an order to make Thor pay some $124M it owes, thanks to payments, fees and interest on a $105M CMBS loan backing the properties.
The two properties are adjacent to each other — 597 Fifth Ave. is 12 stories and 3 East 48th is six — and feature retail and office space. Thor bought them in 2011 for $108.5M, the New York Post reported. It locked down a UBS loan for $105M to consolidate debt on the property in 2014, The Real Deal reported, with the CMBS trust and Wilmington assigned as trustees later that year.
The loan was modified in May 2020, but Thor defaulted again later that year and hasn't met its monthly payments since August 2020. It was transferred to special servicing in October 2020, and LNR was brought on in October as a new special servicer, according to a December Securities and Exchange Commission filing.
The property was 63.9% occupied as of September, according to servicer commentary filed with the SEC. The lender brought in a third-party leasing and management firm last year "due to inaction by" Thor, the filing says.
"The Lender will continue to dual track foreclosure/receivership proceedings while discussing potential alternatives with Borrower," the filing says.
A Thor Equities spokesperson declined to comment.
LNR took over 470 Broadway in a $25M deed-in-lieu-of-foreclosure transaction from Thor in October, Crain's New York Business reported. Last year, Maverick Real Estate Partners sued to foreclose on another of Thor’s properties at 446 West 14th St., per TRD. In 2020, SL Green took ownership of 590 Fifth after Thor defaulted on a $25M mezzanine loan, which resulted in foreclosure.
While many of Thor's investments on Fifth Avenue from the past decade have faced a bumpy road, Sitt has pivoted the company's focus more recently to life sciences and industrial properties outside New York City. He is also pushing to build a casino in Coney Island with one of the three new licenses on offer from the state.