A white knight is swooping in to rescue 2 Herald Sq.
Morris Bailey and his son-in-law Joseph Jerome of JEMB Realty are close to securing a $350 million deal for the leasehold on the property at the northeast corner of Sixth Avenue and West 34th Street Tenants include a Victoria’s Secret flagship and WeWork.
Sitt Asset Management, controlled by Ralph Sitt, has been shopping a recapitalization through the Harmon/Spies team at Cushman & Wakefield. Sources say the strategic alliance will enable Sitt to remain in the deal while JEMB will control three corners at Herald Square. JEMB already owns 1 Herald Center and Herald Towers, and Macy’s is on the remaining corner.
The Commercial Observer reported SL Green Realty Trust purchased the $250 million debt on the property that was due in mid-April. The Sitts had requested an extension before it was sent to a special servicer. SL Green had owned the building’s ground lease which goes to 2070 but sold it to TIAA in 2014 for $365 million. The lease provides the lessee — Sitt and soon JEMB — options to purchase throughout the term.
Now-settled family squabbles had hampered Sitt’s previous financing effort. With more equity in place, C&W is also seeking new financing so the reconstituted partnership can pay off the SL Green debt — or even refinance. Sitt previously bought several Class B assets from the real estate investment trust when it was upgrading its portfolio.
Requests for comment were not returned.
