RXR Defaults On 790K SF Office Tower As Lender Looks To Offload $240M Loan
Months after causing a stir for saying his company could hand the keys of some of its office buildings back to their lenders, it appears Scott Rechler is making good on those words.
Rechler's Long Island-based real estate investment firm, RXR, has defaulted on a $240M loan for 61 Broadway, a 33-story, 790K SF office tower in Manhattan’s Financial District, Green Street's Real Estate Alert reports.
The loan on 61 Broadway went into maturity default on May 1 following RXR’s decision to stop making payments in December. Rechler said he has already made back his equity on the property, The Real Deal reported. RXR didn't immediately respond to Bisnow’s request for comment.
RXR sold a 49% stake in 61 Broadway to China Orient Asset Management in 2016, valued at $440M at the time. The two companies jointly financed the property with $325M in 2019, which included a $240M senior mortgage from a group led by Aareal Bank.
Aareal is looking to sell the property’s defaulted note, and RXR has agreed to a deed-in-lieu-of-foreclosure agreement pending in July, Real Estate Alert reported. Knotel leased 60K SF at 61 Broadway in 2019, taking up four floors of the property, but went bankrupt two years later.
Occupancy at the building is 59% with an average remaining lease term of four years. If RXR’s loan on the office tower sells at face value, it will fetch $300 per SF — a discount of roughly $250 per SF from its value in 2019, and below replacement cost, per REA.
Earlier this year, Rechler said that he was considering handing keys over to lenders for properties that were not performing and that he would consider converting some properties — including 61 Broadway — to residential.
“If you want to put new money in, you need to reset the deck to do so,” Rechler told the Financial Times in February. “And if we can’t, we may have to hand back the keys.”