03/07/2012

Sittís Thor Equities Gearing Up for 3rd Fund

Developer Joseph Sitt is paving the way to roll out his next urban-focused real estate fund.

Sitt, who heads Thor Equities of New York, is telling market players that heís been approached by domestic pension systems and sovereign wealth funds interested in his ongoing strategy of developing and buying retail and mixed-use properties in major-market cities. Heís expected to start interviewing placement agents in the coming weeks for the vehicle, likely called Thor Urban Operating Fund 3. While plans are preliminary, the equity goal probably would be at least $400 million, in line with the managerís previous funds.

It would be Thorís first marketing campaign since the downturn. The firmís previous foray exceeded its $400 million target and ultimately corralled $673 million of equity. Fund 2 had its final close in 2008 and is now more than three-quarters invested.

Thor raises capital from a mix of pensions, endowments, foundations and multi-manager vehicles. Past investors include Baltimore City Employees, General Electric, New York City Employees, New York City Teachers and University of Michigan Endowment. California State Teachers committed $100 million of the $400 million raised for the managerís debut commingled vehicle, which wrapped up fund raising in 2004.

Urban, mixed-use plays have gained in popularity in recent years. The field has become more crowded as hoteliers, multi-family investors and other high-yield players have bid aggressively for a limited supply of suitable properties. For example, Thor outbid multiple hotel companies and developers late last year to grab three office buildings at 516-520 Fifth Avenue in Midtown Manhattan. Thor agreed to pay $132 million for the properties, which it plans to redevelop into a 350,000-square-foot complex with retail, residential and hotel components.

Much of Thorís portfolio is in metropolitan New York, but the company also owns properties in Chicago, Los Angeles, Miami, Philadelphia, San Francisco, Virginia Beach, Va., and Washington. In addition, Thor invests abroad in London and Mexico City, and itís anticipated that the upcoming fund would have a sidecar vehicle focused on Mexico City.

Thorís top holdings include the 1,639-room Palmer House Hilton in Chicago, which it bought for $230 million in 2005; the 267,000-sf retail and office building at 760 Market Street in San Francisco, acquired for $130 million in 2005; and the Takashimaya office building in Midtown Manhattan, purchased for $141.5 million in 2010.

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