Hudson and RXR Partner on $320M Loan for Manhattan Property
The move for RXR will serve as a recapitalization.
Hudson Bay Capital is joining forces to buy into RXR’s Manhattan property called 620 Avenue of the Americas.
The deal for the new joint venture will include a five-year $320 million loan. The move for RXR will serve as a recapitalization through its Office Recovery Fund. It’s unclear if that’s the same as the $1 billion fund dedicated to distressed offices that the New York City landlord launched earlier this year, as reported by the Financial Times.
620 Avenue has been struggling since the pandemic. Tenants WeWork and Bed Bath & Beyond filed for bankruptcy, driving the building’s vacancy north of 50 percent.
However, RXR has seen a significant recovery in the building over the past two years. The developer in a statement said it has reached full occupancy in the office segment of the property thanks to striking 300,000 square feet of renewals and new leases to tenants including financial firm Current, software company Palantir, and Cole Haan.
While vacant retail space remains, RXR noted it has been in talks with “multiple” tenants to occupy the space. And thanks to the recent trends, the company believes the building could return to fully leased “within the next six months.”
“This recapitalization, combined with overwhelming tenant demand both in the office and retail market, demonstrates that by applying capital and capabilities to the right asset with the right capital structure, iconic buildings like 620 Avenue of the Americas can thrive in a post-pandemic world,” said Scott Rechler, chairman and chief executive officer of RXR.
“We have never wavered in our belief in New York City’s recovery, and this transaction is proof of the city’s continued resurgence.”
The 620 Avenue asset features “acclaimed architectural elements” and more than 100,000 square feet of floorplates. The Class A mixed-use property spans 500,000 square feet.
Overall, office activity is continuing to improve in Manhattan. Net absorption in the city exploded to 5.7 million square feet in the three months ending September – the highest levels seen in a decade, according to a report from Transwestern. Plus, leases surged by 31 percent in the year-to-date through September, compared to the same period in 2023.
RXR manages 93 commercial real estate assets that are grossly valued at roughly $18 billion. Hudson, just like RXR, seeks undervalued investments – but has offices in Miami, New York City, Greenwich, and Stamford.