Jeff Sutton and Joe Sitt are selling 530 Broadway for $400M
A partnership led by Shvo has gone into contract on the propertyTRD NEW YORK /January 07, 2020 04:24 PMBy David Jeans and Rich Bockmann
Jeff Sutton and Joe Sitt have gone into contract to sell a Soho retail building for $400 million, after years of mulling a sale.
The retail kingpins went into contract to sell 530 Broadway to a partnership led by Michael Shvo’s eponymous firm, according to those familiar with the transaction.
Wharton is the majority owner on the trio of 11-story buildings at 530-536 Broadway, where retail tenants include Skechers and Club Monaco. Representatives for Sutton’s Wharton Properties and Sitt’s Thor Equities declined to comment. There was no broker on the sale.
The proposed transaction comes amid a challenging market for retail building sales. In recent years, the market for retail investment properties has been hit by rents dropping from record highs.
Ground-floor retail rents on Broadway in Soho had an average asking price of $491 per square foot in the fall, according to the most recent retail report from the Real Estate Board of New York. That’s a drop of nearly 50 percent from the market peak of $977 per square foot in spring 2015.
Thor is among a group of major landlords grappling with the effects of declining retail rents. The firm has pivoted away from the asset class Sitt had made his name in – New York City retail – as the company faces troubles at a number of retail properties, including 494 Broadway and 115 Mercer Street.
Last August, the company launched ThorLogis, a $900 million venture to buy and develop industrial properties.
For Sutton, the sale represents a rare transaction. His firm owns about 120 properties across the city. Late last year, the billionaire investor sold a portfolio of four retail properties that he had owned for more than 28 years on Fulton Street in Downtown Brooklyn for $22 million.
If the deal at 530 Broadway closes, it would mark another notch in the belt for Shvo’s partnership. The group — consisting of Turkish developer Bilgili Holding, Deutsche Finance and German pension fund BVK — has been on an acquisition spree over the last 18 months. The group has bought a suite of high-profile buildings, including 711 Fifth Avenue, 685 Fifth Avenue and 9200 Wilshire Avenue in Beverly Hills, California.
The partnership has tapped JLL’s Mike Tepedino, David Sitt and Bob Tonnessen to secure $200 million debt to finance the acquisition at 530 Broadway.
Sitt’s Thor Equities first paid $190 million for the roughly 200,000-square-foot block of buildings in 2007. Several years later, Sutton acquired the property in 2013 for $237 million in a joint-venture with SL Green Realty. As part of that transaction, Thor maintained a minority stake in the building. In 2016, the partners put the property up for sale with an asking price of $450 million. Two years later, Sutton paid $100 million to buy SL Green’s mezzanine-debt position in the property.