A preforeclosure lawsuit was filed Tuesday against RXR Realty, the owner of the landmarked Helmsley Building, almost exactly a year after RXR defaulted on the $670M loan backed by the building.
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The loan reached maturity Dec. 8, 2023, and SL Green Realty’s Green Loan Services was appointed as special servicer Aug. 30 to handle its workout. In the foreclosure filing, Green Loan Services claims that after accounting for interest and other fees, RXR's unpaid balance is more than $692M.
RXR managed to negotiate a forbearance agreement with the prior servicer, Berkadia, to save the historic property at 230 Park Ave., according to commentary on Morningstar Credit. But that agreement expired in October, at which point Green Loan Services indicated it would initiate a foreclosure proceeding while negotiations with RXR continued, Bisnow first reported.
In addition to the $670M mortgage, the building is tied to $125M in mezzanine debt from Morgan Stanley and Brookfield, according to Crain’s New York Business, which first reported the foreclosure.
RXR, which purchased the 1.4M SF building for $1.2B in 2015, didn't immediately respond to Bisnow’s request for comment, but a spokesperson for the landlord told Crain’s it “continues to have constructive conversations with the lenders.”
SL Green also didn't immediately respond to a request for comment.
While RXR is exploring a path forward for the historic building, including converting a portion to another use, the Helmsley Building has lost a large chunk of its value in just three years. It was recently appraised at $770M, down from $1.3B in 2021.
The 1929 beaux-arts trophy property sits at the center of Park Avenue between 45th and 46th streets. Despite its struggles, Park Avenue properties have generally experienced a surge in leasing interest, primarily from financial tenants.
Office availability on Park Avenue is just above 8%, while average asking rent exceeds $100 per SF. The rest of the city has an average rate of 22%, with Class-A Manhattan buildings’ availability clocking in at 17%, according to CBRE data.
While SL Green is pushing to foreclose on RXR on Park Avenue, the two giants of NYC commercial real estate are partners at the Eighth Avenue office tower Worldwide Plaza, which is in special servicing following late interest payments on a $940M CMBS loan.
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