SL Green Reaches Settlement for 2 Herald Square Property
The agreement resolves a dispute over lease payments for the Manhattan property, stabilizing the office and retail asset.
Updated on Oct. 21, 2026 in Commercial
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SL Green has finalized a settlement framework with TIAA and Norges Bank regarding a long-running dispute over 2 Herald Square. This agreement resolves financial conflicts centered on ground lease payments and court judgments involving the major retail and office property in New York City.
Why it matters
The resolution aims to stabilize the 370,000-square-foot asset after a commercial downturn impacted occupancy and rental income. By settling the dispute, the parties clear the path for future management and potential acquisition decisions at the property.
The dispute involved $24 million in claimed defaulted payments and $16 million in alleged back rent, alongside $8 million in outstanding taxes. These figures follow SL Green's 2024 acquisition of a 95 percent stake in the leasehold for $7 million.
The players
SL Green
A prominent New York City commercial landlord and real estate investment trust.
TIAA
A major financial services organization and institutional property investor.
Norges Bank
The central bank of Norway, which operates as an institutional investor in global commercial real estate.
Victoria's Secret
A national apparel retailer involved in the underlying litigation regarding unpaid commercial rent.
The details
The conflict stemmed from unpaid ground lease obligations that led TIAA to declare a default in late 2024 and attempt to terminate the lease in early 2025. SL Green had previously sought a reduction in ground rent, citing the broader commercial real estate market downturn that left the property at a 35 percent occupancy rate. This settlement framework addresses the arrears and creates a path forward for the property, which SL Green retains the right to purchase next year.
Timeline
2014: TIAA purchased the fee interest in the property.
2018: SL Green acquired the ground lease.
2024: SL Green acquired a 95 percent stake in the leasehold.
December 2024: TIAA declared SL Green in default.
January 2025: TIAA declared the lease terminated.
Money Landscape
This settlement highlights the ongoing challenges in New York City's commercial real estate market as landlords navigate declining valuations and high occupancy pressure. The deal concludes a period of significant legal tension following the market downturn.
For property stakeholders and investors, this resolution clarifies the future operational status of a significant Manhattan asset. Readers should consult with a qualified real estate or tax professional to understand how shifts in commercial property ownership impact broader portfolio strategy.
The takeaway
The settlement of the 2 Herald Square dispute reduces legal uncertainty for a major city asset. Investors holding stakes in commercial real estate should monitor lease agreements and default declarations as key indicators of potential valuation volatility.
What happens next
SL Green maintains the right to purchase the building in 2027.
Further reading
For more on the local office and retail market, visit New York City Commercial.
Source note: This article includes information reported by The Real Deal New York.
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