SL Green, RXR and New York REIT Liquidating are weeks away from losing Worldwide Plaza to the auction block.
The Midtown office’s mezzanine lenders scheduled a UCC foreclosure auction for the property’s controlling entity, Bisnow reported. The public sale of the 1.8-million-square-foot property at 825 Eighth Avenue is slated for Jan. 15.
The entity that controls the building received a default notice last September from the owner of $190 million in mezzanine debt, according to a Securities and Exchange Commission filing from New York REIT Liquidating. Ownership is in default of both senior and mezzanine debt as of July, per the filing.
Goldman Sachs and Deutsche Bank originated $260 million in mezzanine debt. The property is backed by $940 million in CMBS debt originated by the two institutions, plus the mezzanine financing.
Proceeds from the auction will go towards paying off the mezzanine debt and funding unpaid interest payments.
RXR and SL Green did not respond to the publication’s requests for comment.
The debt went to special servicing in September 2024, after law firm Cravath, Swaine & Moore vacated its 617,000-square-foot space for Brookfield’s Two Manhattan West, leaving Worldwide Plaza about 40 percent vacant. That space remains unfilled, and the building was only 63 percent occupied as of March, according to Morningstar, down from 91 percent in 2023.
That could soon worsen as Nomura Holdings — the largest tenant — plans to slash 75,000 square feet from its footprint by the beginning of 2027. The remaining 630,000 square feet is due to expire in 2033.
The property was appraised at $345 million in April, an 80 percent decline from its $1.7 billion valuation in 2017, according to CMBS loan documents. That appraisal drop is expected to bring nearly $500M of losses to the property’s CMBS bondholders.
SL Green and RXR acquired a roughly 49 percent stake in 2015; the since-liquidating New York REIT holds the majority.
Last month, DBRS Morningstar downgraded the rating to junk on the CMBS trust holding $705M of the building’s debt. The special servicer is reportedly negotiating with the borrower regarding a loan modification, according to Morningstar.
— Holden Walter-Warner
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