The owner of 545 Madison Ave., a 17-story, 140,000-square-foot office building, is seeking to evict Thor, which has ground-leased the Midtown property for several years.
In late 2013 Thor paid $53 million, according to city property records, to purchase the building’s ground lease. The arrangement has allowed the firm to essentially act as the property’s landlord in return for rental payments to its underlying owner, Marx Realty.
As the property lost tenants, Thor fell behind on its rent and in July, Marx Realty began eviction proceedings against the firm in New York City Civil Court.
Marx Realty’s complaint states that Thor hasn’t paid $554,583.33 in ground rent that was due July 1, plus interest, and also has failed to pay more than $1.6 million in real estate taxes for the building, which Marx Realty states in its complaint is also a breach of the terms of Thor’s ground lease.
Even before the eviction proceeding Thor was facing financial stress at the property. An August report by Trepp, a real estate debt analytics firm, stated that Thor was in danger of defaulting on payments toward the building’s $30 million mortgage.
LNR Partners LLC, a subsidiary of Starwood Capital, which manages that securitized loan on behalf of bondholders who own the debt, declined to comment on whether the firm was attempting to foreclose on Thor’s interest in the building and halt the eviction by Marx Realty.
The building’s mortgage would be wiped out if Marx Realty takes back control of the property.
A spokeswoman for Thor declined to comment.
Trepp’s report on the property states that the luxury retailer Dunhill recently exited the building’s store space. Another tenant, Panache Bridal, also left the property. Thor launched a suit against Panache Bridal earlier this year in State Supreme Court, alleging that the tenant failed to pay rent and owes Thor almost $250,000. That case has yet to be resolved.
Thor, a firm owned and operated by Joe Sitt, has lost control of several properties in recent years. Last year the firm handed over ownership of 1231 Third Ave., an Upper East Side rental apartment building it purchased for $52.5 million in 2013, to one of its lenders, SL Green. Thor and a partner also sold a 70-unit apartment building on the Upper West Side early last year for $65 million, $2 million less than they paid for it in 2014. According to an article in The Real Deal, Thor also lost the majority of its 50% ownership stake in a trio of buildings it and partner acquired for more than $500 million.
More recently Thor has steered away from areas of the real estate market, such as retail space, that once earned it huge profits but have soured. The company recently announced that it would invest $900 million building and buying warehouse spaces that cater to the growing e-commerce and logistics sectors. In August it purchased for $152 million an 800,000-square-foot property in Bridgewater, N.J., that is home to life sciences tenants—another niche in the property market where Thor wants to expand.