Senior Lenders File $940M Foreclosure Suit Against SL Green, RXR At Worldwide Plaza
There's a new combatant entering the fight over control of Worldwide Plaza, one of New York City’s most prominent distressed office buildings.
Goldman Sachs and Deutsche Bank, along with the trustee representing bondholders of Worldwide Plaza's $705M CMBS loan, filed two lawsuits against the owners of the 2M SF office building and neighboring retail properties on Friday and Saturday in New York County Supreme Court.
Goldman and Deutsche originated a $940M loan for the property in 2017 to a joint venture of RXR and SL Green when it acquired a majority stake in the properties at 825 Eighth Ave., 313 W. 49th St. and 350 W. 50th St. They sold the majority of that debt into a CMBS trust and retained the rest, according to the suits, which were first reported by PincusCo.
The filings are the latest twist in a monthslong ownership dispute over the property, which has struggled with high vacancy after its largest tenant moved out.
Worldwide Plaza’s CMBS loan was placed in special servicing in September 2024 after anchor tenant Cravath, Swaine & Moore moved out, leaving the building just 63% occupied. In August, appraisers knocked 80% off the building’s value, effectively wiping out hundreds of millions of dollars for investors.
In December, SL Green and RXR — along with New York REIT Liquidating, which owns a 49.9% stake in the property — failed to cover a $2.9M interest payment and didn't provide $6.5M of the property's $21.6M property tax bill due on Jan. 1, according to the complaint filed Saturday.
In addition to the office tower, the lenders are seeking to foreclose on an adjacent 250K SF retail property, which includes several shops, the New World Stages Off-Broadway theater and a parking garage.
Goldman, Deutsche and the bondholders are asking the judge to schedule a foreclosure auction and place the properties in receivership. They are also asking that RXR and SL Green be forced to repay the debt and be “forever barred and foreclosed from any and all right” to the property.
The pyramid-topped building, designed by David Childs of SOM, is also saddled with $260M in mezzanine debt, the majority of which was quietly purchased last year by Gary Barnett's Extell Development.
The entity Extell used to purchase the debt then pursued a UCC foreclosure, a mechanism mezzanine lenders can use to speedily take over the ownership entity of an asset.
SL Green and RXR sued to block that foreclosure auction, but a judge denied their request on Jan. 28, a day before it was scheduled to be held. The landlords appealed, further forestalling the auction.
It isn’t entirely clear what bearing the UCC foreclosure would have on the judicial foreclosure being pursued by Goldman, Deutsche Bank and special servicer Situs Holdings.
Spokespeople for Goldman Sachs and Deutsche Bank declined to comment. RXR and Extell didn't immediately respond to requests for comment.
A spokesperson for SL Green told Bisnow in an emailed statement that the REIT attributes “little to no value to the asset,” but it is still set on retaining control.
“We have a plan to revitalize the building and the capital to execute it,” SL Green’s spokesperson said. “This administrative filing is a procedural step and all parties are separately actively engaged and working collaboratively toward a resolution.”
