Worldwide Plaza's Value Slashed By $1.4B In New Appraisal
The value of a distressed Midtown skyscraper has plunged dramatically.
An appraisal conducted in April placed the value of the 1.8M SF Worldwide Plaza office tower at just $345M, an 80% reduction from its value in 2017, according to documents tied to the building's CMBS loan obtained by Bisnow.
SL Green and RXR partnered to acquire a roughly 49% stake in the building at 825 Eighth Ave. eight years ago in a transaction that valued it at $1.7B. The liquidating company for New York REIT has owned the majority stake since it was established to wind down the company in 2018.
SL Green and RXR are the sponsors for the $940M in CMBS debt secured against the property that was originated by Goldman Sachs and Deutsche Bank.
SL Green declined to comment to Bisnow. RXR, Deutsche Bank, Goldman Sachs and Situs did not respond to requests for comment.
The 49-story tower's debt was placed in special servicing last September after law firm Cravath, Swaine & Moore left its 617K SF space in the building in favor of 480K SF at Brookfield’s Two Manhattan West earlier in the summer.
The Worldwide Plaza office tower was developed in 1989 as part of a 2M SF project that also includes a 38-story condo, a seven-story condo, a theater space underneath the building and an outdoor plaza. It is the only property that New York REIT has not sold since beginning its liquidation process, according to Crain’s New York Business.
The debt was split between two CMBS transactions: a single-asset, single-borrower loan that holds $381.3M of senior debt and $323.7M of junior debt, and $235M of pari-passu senior debt held by a separate CMBS trust.
There is also $260M of mezzanine debt on the property held by Goldman and Deutsche Bank, according to a document obtained by Bisnow. The sponsors had an implied equity valued at $540M when the loan was originated, but the new appraisal effectively wipes all of that out, plus the owners of several classes of the CMBS loans.
The debt matures in November 2027, with the sponsors needing to make interest-only payments until then.
SL Green, RXR and New York REIT have been locked in a yearslong legal battle over a $90M reserve to replace Cravath, but a judge ruled in February that the sum belongs to New York REIT, The Real Deal reported.
Cravath's relocation led DBRS Morningstar in July 2024 to downgrade the credit rating of several classes of the CMBS debt, as it left Worldwide Plaza roughly 40% empty. The departure also created an operating shortfall that prompted the loan's special servicer, Situs Holdings, to use the building's reserves to cover, according to the ratings agency.
The building’s owners obtained a loan modification in January that allowed more of the building's reserves to cover the shortfall, but that agreement only lasted through July, and the debt has remained in special servicing as SL Green and RXR have been in talks for another modification to free up tens of millions in capital needed to lease up the vacancy.
Another huge vacancy that may reduce the building's occupancy rate to under 30% could be looming.
Nomura Holdings, the U.S. arm of the Japanese bank, currently occupies 34% of Worldwide Plaza with a 700K SF lease. But in March, Nomura was reportedly in talks with Vornado Realty Trust to relocate to Penn 2. While Nomura’s Worldwide Plaza lease doesn’t expire until 2033, it has an option to terminate its lease in 2027, which it had to exercise by July 1.
Nomura was in talks to renew its space at Worldwide Plaza at the same time as it was eyeing a relocation, per August special servicer commentary in the Morningstar Credit database published this week. Representatives from the building's leasing team didn't return Bisnow's requests for comment.
Many owners of large, decades-old Manhattan office towers saddled with prepandemic mortgages have watched as lower valuations wiped out their equity. Charles Cohen’s 750 Lexington Ave. was appraised at a value of just $41M this week, down from its $300M valuation in 2015, The Real Deal reported.
