Thor’s Scribner building with $105M loan moves closer to foreclosure auction

Two Midtown East properties, the Charles Scribner’s Sons Building at 597 Fifth Avenue and an adjacent building at 3 East 48th Street, that Thor Equities bought in 2011 for a combined $108.5 million moved closer to a foreclosure auction with a State Supreme Court judge’s ruling this month approving both a judgment of foreclosure and the appointment of a referee to assess the total due on a defaulted $105 million loan.
Case 650806/2023 LINK
Judgment LINK

The judge Andrea Masley signed the ruling on April 10, 2024. The ruling did not set a sale date, which is typical at this stage in the foreclosure process.

The bondholders for the securitized loan, represented by special servicer LNR Partners, filed a pre-foreclosure action in February 2023 alleging the loan was in default.

Thor Equities bought the two buildings in 2011 for $108.5 million from Kuwaiti investor, Dr. Louai Alassar’s A&A Acquisitions, the New York Post reported at the time.  Two years later, it refinanced them with $87.3 million and then in June 2014 upped the debt to $105 million. That 2014 loan was packaged into a commercial mortgage backed security.

Thor Equities has not challenged the foreclosure process for the properties, according to court records. The Real Deal reported in January that an appraiser valued the two buildings at $84 million. Thor told The Real Deal that it, “wrote these assets off years ago,” and that it was, “working actively with our lender towards a cooperative resolution.”

The property

The retail building at 597 Fifth Avenue in Midtown East has 52,727 square feet of built space and 694 square feet of additional air rights for a total buildable of 53,400 square feet according to a PincusCo analysis of city data. The parcel has frontage of 53 feet and is 100 feet deep with a total lot size of 5,340 square feet. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The property is in the Individual Landmark. The city-designated market value for the property in 2022 is $42.9 million.

Prior sales and revenue

This property was sold for $99 million on July 8, 2011.

The 52,727-square-foot property generated revenue of $8 million or $151 per square foot, according to the most recent income and expense figures.

Violations and lawsuits

According to city public data, the property has received $25 in OATH penalties in the last year.

The property was involved in one lawsuit and zero bankruptcies over the past two years. The suit was a $105 million commercial foreclosure concerning a loan filed on February 10, 2023, by COMM 2014-UBS4 and LNR Partners against Thor Equities and Joseph J. Sitt.

The neighborhood

In Midtown East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 2nd highest sale turnover among other neighborhoods in the city with $3.7 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 15.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 25 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 10 of the 20 commercial properties representing 1,510,992 square feet of the 2,546,047 square feet. The largest owner is BLDG Management, followed by Chun Ka Luk and then Elo Organization. On the tax block, there was one new building construction project filed totaling 285,606 square feet. It is a 285,606 square-foot business (B) building submitted by Albert Sanfilippo with plans filed June 30, 2022 and it has not been permitted yet.

The surrounding

Within a 400-foot radius of 599 5 Avenue, PincusCo identified 14 commercial real estate items of interests occurred over the past 24 months. Of those 14 items, one was for major renovation including a certificate of occupancy change. It was a permit issued on May 31, 2022 for the $4 million renovation of 3,000-square-foot business (B) building with zero residential units at 604 5th Avenue. Of those 14 items, four were sales above $5 million totaling $166 million. The most recent of the four was Jack Elo which bought the 60,500-square-foot, 31-unit office building (O6) on 6 West 48th Street for $34.7 million from Robert A. Posner on November 8, 2023. Of those 14 items, nine were loans above $5 million totaling $396.9 million. The most recent of the nine was Elo Organization in which borrowed $5.6 million from Dime Community Bank secured by the 16,896-square-foot, one-unit office building (O6) on 19 East 48th Street on February 9, 2024.

Direct link to the property’s ACRIS page and link to DOB NOW portal.