Gary Barnett just scored a victory in his tussle with two other New York real estate heavyweights over control of a prominent Midtown office tower.
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A New York County Supreme Court judge this week denied an attempt by SL Green and RXR to block Extell Development's scheduled foreclosure auction of Worldwide Plaza.
The decision clears the way for Extell to pursue a UCC foreclosure for the ownership of the nearly 2M SF building at 825 Eighth Ave., rescheduling an initial auction from earlier this month to Thursday, new court filings show.
Judge Andrea Masley denied a request by SL Green and RXR — which control the building through a jointly owned majority stake — for a preliminary injunction, saying the plaintiffs had not satisfied a key requirement proving the building’s sale would be commercially unreasonable.
“We’re disappointed in the most recent ruling,” an SL Green spokesperson told Bisnow. “However, we still own and control the asset and we believe we will ultimately reach a resolution with the mezz lender which meets all parties’ objectives.”
RXR declined to comment. A spokesperson for Extell didn't immediately respond to a request for comment.
A shell company acquired $190M in mezzanine debt tied to the 49-story office tower, originated in 2017 by Goldman Sachs and Deutsche Bank, and sued to foreclose in November, Bisnow first reported. It was later revealed that Barnett owned the company and used it to acquire the debt from Shinhan Financial Group, which had bought it from Goldman and Deutsche, The Real Deal reported.
RXR and SL Green filed suit this month to try to block Extell from proceeding with the foreclosure attempt, calling the process a “sham auction,” The Real Deal reported at the time.
The two NYC stalwarts claimed in a Jan. 7 court filing that Extell is trying to control Worldwide Plaza’s debt restructuring process through the foreclosure rather than genuinely attempting to recover its mezzanine debt. The joint venture claimed the way Extell structured the auction was designed to prevent other bidders.
It's now unclear if the auction will go ahead or if SL Green and RXR can negotiate a solution with Barnett. Either way, the building is desperately in need of a turnaround.
The SL Green and RXR partnership acquired its stake in Worldwide Plaza in 2017 in a transaction valuing the building at $1.7B. But the ownership — which includes New York REIT Liquidating — defaulted on the building's $1.2B in mortgages in 2024.
That was after Worldwide Plaza's anchor tenant, Cravath, Swaine & Moore, relocated to Two Manhattan West, leaving a 617K SF vacancy that has yet to be filled. In August, appraisers slashed Worldwide Plaza’s value by 80% to just $345M.
Nomura Holdings, the U.S. arm of the Japanese bank, is the building’s largest remaining tenant. It reached a deal in June to terminate roughly 75K SF of its footprint by January 2027. It still has 630K SF on a lease that expires in 2033.
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