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RXR may have to give up one of the office buildings it had hoped to hold onto.
Massachusetts Mutual Life Insurance is seeking to foreclose on the real estate giant’s property at 340 Madison Ave., according to court papers filed Friday. In 2011 the firm provided RXR with a $315 million loan for the 22-story tower, which was set to mature in August, the complaint says. MassMutual and RXR later extended this date to February, but RXR has still defaulted on the loan, according to the complaint.
A spokesperson for investment manager Barings, a MassMutual subsidiary, confirmed that the loan is in default and that Barings is taking action.
The city’s office buildings have been infamously struggling since the pandemic. The persistence of remote and hybrid work has hit many of them hard, while high interest rates have made securing financing more difficult.
RXR recently launched what it dubbed Project Kodak to confront this new reality by taking a hard look at which buildings in its portfolio are worth keeping. The company is calling obsolete buildings “film” properties and more modern ones “digital” properties. It has put 61 Broadway in the “film” category, for instance, and is working on converting it into residences.
Despite the problems it is facing at 340 Madison Ave., that building remains in its “digital” category, according to the firm.
In a statement, senior adviser to RXR David Garten said 340 Madison is a “high-quality building with a broken capital structure.” He added that the firm has been in discussion with the lender to restructure the mortgage.
The building is 760,000 square feet and was built in 1928; it was renovated in 2003, according to commercial real estate database CoStar. The firm estimates its asking rents at between $68 and $83 per square foot and says it is 60.6% leased with about 377,000 square feet of vacant space.
This quarter RXR leased space at the building to Yaupon Capital Management and Northampton Capital Partners, the Commercial Observer reported. Yaupon inked a three-year lease for 6,917 square feet, and Northampton signed a three-year lease for 5.542 square feet.
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Eddie Small , 2024-05-21 18:04:33
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