A 10-story office building steps from the Empire State Building is headed toward foreclosure after its owner, Caerus Group, stopped paying its mortgage this spring while the property sat mostly vacant. The lender behind the loan filed a federal lawsuit on August 14 seeking to seize control of 10 East 34th Street, a building that once housed a music publisher's headquarters and now can't keep its floors filled.
The trustee, identified in court filings as BNK 2018-BNK13 LLC, filed the foreclosure complaint against 10 East 34th Street LLC in the U.S. District Court for the Southern District of New York under docket 1:26-cv-06952, according to PacerMonitor. The trustee retained law firm Alston & Bird LLP and named the New York City Environmental Control Board as a co-defendant alongside 100 unnamed John Doe entities, a standard move in commercial foreclosure suits to clear potential municipal liens. As The Real Deal first reported, the suit targets the $37.5 million mortgage on the 55,000-square-foot building, which sits between Fifth and Madison avenues directly across from the Empire State Building.
Per the complaint, Caerus Group stopped making monthly mortgage payments on April 1. Trimont, the loan's servicer, sent the company a letter on May 6 seeking more than $500,000 for the missed April and May payments, and followed up with another letter on June 30 after Caerus also skipped its June and July payments. The trustee is now asking the court to foreclose on the mortgage and appoint a receiver to run the property while the case proceeds.
A Building That Never Recovered From Its Tenant Exodus
The complaint describes a sharp occupancy decline over the prior two years, with significant vacancies plaguing the building. Two tenants currently occupy less than 30 percent of the building combined: Modernus Walls, which designs architecture products and has a lease expiring in February 2027, and the Research Foundation of CUNY, whose lease runs out in September. Ground-floor retail operator VR World, which had leased its space through March 2028, went dark according to the building's April 2024 rent roll cited by Morningstar DBRS, and the complaint states that the building's lead tenant stopped paying rent for several months before eventually vacating.
The vacancy problem is not new. Building 10 East 34th Street already had 60 percent of its leases set to expire at the start of 2016, the year Caerus Group, led by Leo Tsimmer, bought the property from longtime owner Brause Realty for $51.7 million. Caerus initially moved to stabilize the asset by leasing 27,750 square feet across five floors to TTC USA Consulting Corp, a Turkish trade group, but that arrangement wasn't enough to sustain occupancy over the long run.
The 2016 Assemblage and a 2018 Refinancing
Caerus' purchase of 10 East 34th Street was part of a larger block assemblage. The same year, the firm also closed on the adjoining five-story, 29,000-square-foot building at 4 East 34th Street, which had previously served as headquarters for the Zionist Organization of America, according to the Commercial Observer. That deal had been delayed for more than a year by litigation with former retail tenant B. Bowman & Co., operator of the Bolton's clothing chain, before the lawsuit was dismissed in May 2016 to clear the sale. Caerus financed the two-building push with $50 million in debt from Apollo Commercial Real Estate Finance, bringing its total acquisition cost for the block to $89.9 million, per The Real Deal's earlier reporting.
In 2018, Caerus refinanced 10 East 34th Street with a 10-year, $37.5 million mortgage provided by Morgan Stanley. That loan was packaged into a commercial mortgage-backed security the same year, with BNK 2018-BNK13 later appointed trustee for the mortgage bondholders — the entity now suing to foreclose. Caerus Group did not respond to a request for comment from The Real Deal.
Built in 1907 for a Music Publisher
Long before its current troubles, 10 East 34th Street had a very different life. Constructed in 1907 in the Beaux-Arts style by architects Townsend, Steinle & Haskell, the building served as headquarters for music publisher Charles H. Ditson & Company and became known as the Ditson Building, according to background compiled by My Walk in Manhattan. Before Caerus bought it, the property had been held for decades by a partnership that included Brause Realty Inc., Walter & Samuels, and the Cohen family, who ultimately chose to sell rather than fund the capital improvements needed to re-lease expiring space.
Part of a Wider Wave of Midtown Office Distress
10 East 34th Street's troubles are unfolding against a backdrop of nationwide strain on office mortgages. The overall U.S. CMBS office delinquency rate hit an all-time high of 8.89% in July, according to Fitch Ratings, surpassing the previous peak of 8.83% set in September 2012. Trepp put the figure even higher, reporting the CMBS office delinquency rate reached 11.57% in June, with special servicing volume across the market expanding to $37.6 billion.
Manhattan's own office market remains soft, with overall vacancy at 19.3% in the second quarter of 2026 per Cushman & Wakefield, and older Class B buildings like 10 East 34th Street facing the steepest rent erosion and tenant retention challenges. The foreclosure filing lands amid a broader wave of Midtown distress this summer, including a June suit against 40 West 37th Street and an August pre-foreclosure filing tied to a $73 million loan on 345 Seventh Avenue, according to PincusCo. Hoodline has previously covered the 40 West 37th Street case as part of this same pattern of lenders moving to foreclose rather than modify underwater office loans.
