Loan on RXR's Sixth Avenue Tower Extended

RXR has negotiated a modification on a $1.2B loan on 1285 Sixth Avenue, adding $220M in equity to pay down the loan’s balance to $980M.

The interest rate on the senior loan, originated by Morgan Stanley and AIG, will increase from about 4% to 6% and the maturity on the debt for the 1.8M SF tower was extended for five years, according to a report in TheRealDeal.

The tower, across the street from Rockefeller Center, is 100% leased. The modified loan also provides for a $60M facility to pay for future capital costs, the report said. The loan, originated in 2016, expired in March. The borrowers were granted an extension.

RXR and partners David Werner and China Life Insurance Company bought the 42-story tower in 2016 for $1.7B. The building’s largest tenant is UBS, the Swiss Bank, which has a lease that runs through 2032.

RXR, which stopped making payments in December on a $240M loan backed by 61 Broadway, a century-old 33-story office building in Manhattan’s Financial District, defaulted on the loan when it came due on May 1.

A lending syndicate led by Aareal Bank has tapped JLL to solicit bids for the loan, a senior loan that originated in 2019. To facilitate the sale, RXR agreed to hand the property back through a deed-in-lieu of foreclosure that will facilitate the sale of the building, Green Street reported.

The tower at 61 Broadway-considered a crown jewel of the Financial District when it was built in 1914-is 59% occupied with a weighted average remaining lease term of 4.2 years.

According to RXR CEO Scott Rechler, the company has already recouped its equity in 61 Broadway, which RXR acquired in 2014 for $330M. In 2016, RXR sold a 49% stake in the building China Orient Asset Management, increasing the value of the property to $440M.

In 2019, RXR and China Orient refinanced the property with $325 million of debt. Aareal, acting on behalf of a lending group, structured $240M as senior debt and another $35M as senior mezzanine debt. SL Green Realty also originated a junior $50M mezzanine loan.

In February, Rechler signaled in a bombshell interview with the Financial Times that RXR was preparing to halt debt payments on several older Manhattan office buildings and “give the keys back to the bank.”

After what the company described as an “exhaustive” review of its office portfolio, Rechler told FT that RXR has concluded that an unspecified number of these assets no longer make economic sense-Rechler called them “obsolete”-in a post-pandemic office market driven by a flight to quality in new Class A buildings and hybrid work that is emptying out older buildings.

Rechler said RXR has decided not to invest in its older buildings unless it can find a way to convert them to another use-most likely residential-or has determined in its evaluation that the asset can still prosper as a low-rent alternative to newer office buildings.