A $670M loan backed by RXR's office building at 230 Park Avenue, more famously known as the Helmsley Building, has been transferred to special servicing.
A KBRA report, cited by Crain's, said the CMBS is due on December 8 and facing "imminent maturity default." According to the report, RXR is working to restructure the loan.
The 35-story, 1.4M SF landmark was acquired by RXR in 2015 for $1.2B. The acquisition was financed with a $785M financial package from American International Group, Invesco and South Korea's National Pension Service.
RXR upgraded the property, located next to Grand Central Terminal, with an estimated $190M in improvements, including an upgrade of the tower's limestone façade, bathrooms and windows.
According to an S&P Global report, the historic building struggled during the pandemic, with weighted average rent sinking to $79.40 per square foot in 2021, about 23% below the average in the area.
Major tenants at 230 Park Avenue, including Voya, Reed Elsevier and Clarion Partners, have leases at the building that expire in 2025.
The tower at 230 Park Avenue was built in 1929 and acquired by a group of investors including developer Harry Helmsley in 1978. Helmsley put his name on the tower, which achieved landmark status in 1987.
In February, RXR CEO Scott Rechler signaled in a bombshell interview with the Financial Times that RXR was preparing to halt debt payments on several older Manhattan office buildings and "give the keys back to the bank."—
After what the company described as an "exhaustive" review of its office portfolio, Rechler told FT that RXR concluded that an unspecified number of these assets no longer make economic sense—Rechler called them "obsolete"—in a post-pandemic office market driven by a flight to quality in new Class A buildings and hybrid work that is emptying out older buildings.
Rechler said RXR has decided not to invest in it older buildings unless it can find a way to convert them to another use, most likely residential, or has determined in its evaluation that the asset can still proper as a low-rent alternative to new office buildings.
RXR, which stopped making payments in December on a $240M loan backed by 61 Broadway, a century-old 33 story office building in Manhattan's Financial District, defaulted on the loan when it came due on May 1.
A lending syndicate led by Aareal Bank tapped JLL to solicit bids for the loan, a senior loan that originated in 2019. To facilitate the sale, RXR has agreed to hand the property back through a deed-in-lieu of foreclosure if necessary to facilitate the sale of the building, Green Street reported.
As of May, the tower at 61 Broadway-considered a crown jewel of the Financial District when it was built in 1914-was 59% occupied with a weighted average remaining lease term of 4.2 years.