A month after defaulting on its mortgage and landing in special servicing, 650 Madison Avenue may be nearing its last days as a Vornado Realty Trust asset.
The lenders at the Plaza District office tower are expected to take control shortly, according to Piper Sandler analyst Alexander Goldfarb. He further predicted the banks would try to quickly sell the building, referring to it to Crain’s as “kryptonite to a lender.”
Vornado chief executive officer Steven Roth appears resigned to the loss. During an earnings call on Tuesday, he said that “bad stuff happens every once in a while, even to us,” while noting the firm wrote off its stake in the property three years ago.
The debt behind the Class A office building was sent to special servicing last month after the borrower failed to meet payment obligations, according to Morningstar Credit.
Located between East 59th and 60th streets, the 28-story office and retail building totals 595,000 square feet. It was purchased by a group of investors — including Vornado, Oxford Properties Group and the Ontario Municipal Employees Retirement System — in 2013 for roughly $1.3 billion.
Ownership secured a $214 million refinancing for the property in 2019. But revenue and occupancy have fallen since then. Occupancy was 97 percent when the loan was issued, but Ralph Lauren — which once leased over 40 percent of the space in the building — downsized by 39 percent and is paying about 30 percent less in rent.
Occupancy dipped to 57 percent in 2024, according to Morningstar, but is back up to 74 percent. Office tenants include Lakewood Capital, according to Vornado’s website, while retail space is occupied by Celine, Moncler, Balmain, Cremieux, Tod’s and others.
At its most recent appraisal, the property saw its value fall; once estimated to be worth $1.21 billion, 650 Madison was appraised at $950 million.
Vornado’s revenue for the third quarter was $453.7 million, a 2.4 percent year-over-year increase.
— Holden Walter-Warner
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