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CMA
May 18, 2018  

Sutton, Sitt Aim to Refinance SoHo Complex

A Wharton Properties partnership is seeking to line up $300 million of debt on a trio of office/retail buildings in Manhattan’s SoHo neighborhood.

Wharton, headed by investor Jeff Sutton, and its partner, Joe Sitt’s Thor Equities, are talking to lenders about a floating-rate mortgage with a term of three years on the adjacent properties, at 530-536 Broadway. JLL is marketing the assignment.

The interconnected buildings, at Spring Street, encompass some 177,000 square feet of office space and 24,000 sf of street-level retail space. The retail component, by virtue of being in one of Manhattan’s busiest shopping districts, accounts for a large share of the buildings’ value.

Thor has been an owner since 2007, when it led a partnership that purchased the properties from Schack & Schack Real Estate of New York for $190 million. Thor bought out its partners the following year.

Wharton acquired a majority stake in 2014, via a deal that valued the buildings at $326 million. Morgan Stanley provided $200 million of debt in conjunction with the recapitalization, which may have included some mezzanine financing.

The Wharton-Thor team put the properties on the block in 2016, with a whisper price of about $500 million. Eastdil Secured had the listing, which didn’t result in a sale.

Eastdil’s top Manhattan brokers subsequently jumped to Cushman & Wakefield, which brought out a retooled offering near the end of that year. The buildings, then 80% leased, were pitched to value-added investors as an opportunity to lease vacant space and raise rents as office leases rolled over, but no deal materialized.

Constructed in 1897, the buildings have 250 feet of frontage on Broadway and Spring Street. They’re connected through multiple floors and share some mechanical systems.

The retail tenants are AT&T, Club Monaco and Skechers. The offices are mostly leased to technology and media companies.