A foreclosure action filed against RXR’s Helmsley Building seems to have sent tenants running for the exits.
The vacancy rate at 230 Park Avenue in Midtown Manhattan exploded to 44 percent, doubling from the 20 percent vacancy rate at the time of the December filing, Crain’s reported. The increased stress at the property came to light in a recent S&P Global report.
In recent months, real estate investor Clarion Partners, law firm Dentons and Voya Financial have departed the property; Voya and Clarion were known to have leases that expired this year. Dentons was set to lease its space until 2026, though.
The building generates less than half the cash needed for the mortgage, according to S&P estimates. The property’s loan exposure also jumped by $5 million to $690 million after RXR needed to borrow to pay property taxes and insurance.
RXR was hit with a foreclosure action in New York State Supreme Court in December; the company said it was having “constructive conversations” with the lenders at the time. The filing came a year after RXR allegedly defaulted on a $670 million mortgage.
RXR acquired the 35-story, 1.4 million-square-foot landmarked property from Invesco, Monday Properties and South Korea’s National Pension Service for $1.2 billion in 2015. Scott Rechler’s firm took out a $785 million acquisition loan from American International Group and invested $190 million in improvements for the limestone exterior, bathrooms and windows.
The property was appraised in November at $770 million, roughly 64 percent of its purchase price about a decade earlier.
Last year, RXR started looking at the prospect of converting part of the property — presumably into residences — but progress on that hasn’t been publicly disclosed. RXR would likely turn part of the property into apartments while retaining office space.
In the meantime, special servicer SL Green is on the hunt for investors that could provide a cash infusion for the iconic building and help it avoid becoming a “zombie” that can’t generate the cash for its bills.
— Holden Walter-Warner
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