A troubled Midtown office tower is scheduled to hit the auction block next year, another reminder that Manhattan’s rising tide isn’t lifting all boats.
The entrance to Worldwide Plaza, a 49-story office skyscraper on Eighth Avenue.
Mezzanine lenders have scheduled a UCC foreclosure auction for the public sale of the entity that controls Worldwide Plaza, a roughly 2M SF skyscraper at 825 Eighth Ave.
Goldman Sachs and Deutsche Bank originated a combined $260M of mezzanine debt tied to the building, which is owned by a joint venture of SL Green, RXR and New York REIT Liquidating. JLL scheduled a public sale for Jan. 15, a notice for which was obtained by Bisnow, for WWP Mezz LLC, which controls the deed to Worldwide Plaza.
Proceeds from the auction, in addition to paying off the mezzanine loan, would go to fund unpaid interest payments, attorney fees and related charges, according to a KCP credit alert.
Goldman Sachs, Deutsche Bank and JLL declined to comment on the foreclosure notice.
UCC foreclosures target corporate entities, not properties, are speedier processes than judicial foreclosures, and can be used by mezzanine lenders to seize control of properties before a senior lender takes action.
In the case of Worldwide Plaza, which has $940M in senior mortgages broken into multiple CMBS deals, investors in those securities are bracing for huge losses.
RXR and SL Green partnered in 2017 to acquire a 49% stake in the 49-story building from New York REIT at a $1.7B valuation, financed by $1.2B in debt underwritten by Goldman Sachs and Deutsche Bank. New York REIT Liquidating, which was established to wind down the REIT in 2018, still owns a majority stake in the building.
The CMBS loans were placed into special servicing last September after law firm Cravath, Swaine & Moore vacated its 617K SF in the tower for 480K SF at Brookfield’s Two Manhattan West in a long-planned move. The space has yet to be filled, according to a Securities and Exchange Commission filing by New York REIT Liquidating in August.
Cravath’s exit from Worldwide Plaza, which was built in 1989, has been a blow from which the building’s owners haven’t recovered. The building was 63% occupied as of March, according to Morningstar, down from 91% in 2023.
WWP Mezz LLC received a default notice in September 2024 from the holder of $190M of mezzanine debt, according to the filing. As of July, the landlords were in default on both their senior and mezzanine debt, the filing says.
In August, an appraisal chopped $1.4B, or 80%, off Worldwide Plaza’s value, Bisnow first reported, cutting its estimated value down to just $345M. The reduced appraisal is expected to trigger nearly $500M of losses to the building’s CMBS bondholders, hitting previously AAA-rated investment classes, Bloomberg reported.
In October, DBRS Morningstar downgraded the rating on the CMBS trust that holds $705M of the building’s debt to junk. It noted in its report that the special servicer was negotiating with the borrower on a loan modification.
Nomura Holdings, the U.S. arm of the Japanese bank, is the building’s largest tenant and reached a deal in June to terminate roughly 75K SF of its footprint by January 2027, according to the landlord’s SEC filing. Its remaining 630K SF lease expires in 2033.
RXR, SL Green and Nomura didn’t immediately respond to Bisnow’s requests for comment.