In under a year, one of Manhattan\u2019s prime office buildings has gone from being worked-out to being at the center of a foreclosure auction.\u00a0\u00a0<\/p>\n
But one of the biggest names<\/a> in New York City commercial real estate is in the driver\u2019s seat as the owner of the mezz debt, sources said.\u00a0\u00a0<\/p>\n SEE ALSO: Inside Commercial Observer\u2019s 2025 Fall Finance Forum<\/a><\/p>\n Nine months after Commercial Observer reported<\/a> sponsors SL Green and RXR<\/a> secured a modification on the $940 million commercial mortgage-backed securities (CMBS) loan on One Worldwide Plaza \u2014 a 2 million-square-foot office tower at 825 Eighth Avenue \u2014 mezzanine lenders have scheduled a UCC foreclosure auction of the property for Jan. 15.\u00a0<\/p>\n Sources familiar with the auction said Gary Barnett, president and founder of Extell Development<\/a> Company, bought the mezzanine debt and the UCC foreclosure could now give him control of the 35-year-old Postmodern brick tower.\u00a0<\/p>\n Extell Development declined to comment.\u00a0<\/p>\n The Real Deal and BizNow reported that New York REIT<\/a> Liquidating LLC, a limited liability company formed to complete the liquidation of New York REIT, defaulted on $190 million in mezzanine debt, and that the ownership trio has been in default on both the senior and mezzanine debt since July.\u00a0<\/p>\n The mezzanine loan is secured by the equity interest in the borrowing entity, so an auction or foreclosure on that loan effectively allows the winner of the auction to step in as the new borrower on the secured debt, and usually when that happens, the new borrower would then negotiate with the servicer to modify the CMBS loan, explained David Putro, heard of analytics at Morningstar Credit.<\/p>\n SL Green and RXR acquired a 49.9 percent ownership stake in the property in 2017, when they valued the office building at $1.7 billion. New York REIT Liquidating retains the 50.1 percent ownership of Worldwide Plaza.<\/p>\n TRD reported the property was appraised at $345 million in April, an 80 percent decline from its 2017 valuation.\u00a0<\/p>\n The building\u2019s $940 million single-asset, single-borrower (SASB) mortgage \u2014is\u00a0 securitized in WPT 2017-WWP multiple conduits \u2014 with\u00a0 pari passu senior notes also now held in GSMS 2017-GS8, GSMS 2017-GS9, BMARK 2018-B1 and BMARK 2018-B2. There is an additional $260 million in debt across three mezzanine loans.<\/p>\n The March 2025 modification was first highlighted by Morningstar Credit, which added that the sponsorship team planned to use loan reserves to fund operating expenses and debt service shortfalls. The loan was scheduled to mature in November 2027.<\/p>\n SL Green and RXR declined to comment.\u00a0<\/p>\n The massive SASB CMBS loan was first transferred to special servicing in September 2024 following a monetary default, as One Worldwide Plaza began feeling the effects stemming from the August 2024 loss of tenants Cravath, Swain & Moore, which had occupied 30 percent of the building. Moreover, tenant Nomura, occupier of 34 percent of the leasable area, holds an early termination option for January 2027.\u00a0<\/p>\n The departure of Cravath triggered a cash-trap provision that froze roughly $22 million that had been reserved for tenant improvements \u2014 almost all of the money was instead used by the sponsors to fund financial shortfalls in the ensuing months, according to CO\u2019s earlier report on Morningstar\u2019s analysis.\u00a0<\/p>\n During an October 2023 interview, SL Green CEO Marc Holliday told CO that sponsorship was working on redevelopment plans for One Worldwide Plaza and planned to make the 500,000 square feet of office space once occupied by Cravath at the top of the building \u201cas attractive as can be to the market.\u201d\u00a0<\/p>\n \u201cIt was kind of a state-of-the-art building when it was constructed back in the 1980s,\u201d explained Holliday, \u201cAnd I think, with a little attention paid to modernizing and creating some amenities in the building, it will be competitive.\u201d<\/p>\n Brian Pascus can be reached at bpascus@commercialobserver.com <\/a>while Cathy Cunningham can be reached at ccunningham@commericalobserver.com<\/a>.<\/p>\n \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"In under a year, one of Manhattan\u2019s prime office buildings has gone from being worked-out to being at…\n","protected":false},"author":2,"featured_media":43315,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[1512,75,84,83,2177,9,24,63,24858],"class_list":{"0":"post-43314","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-manhattan","8":"tag-gary-barnett","9":"tag-manhattan","10":"tag-manhattan-headlines","11":"tag-manhattan-news","12":"tag-marc-holliday","13":"tag-new-york","14":"tag-new-york-city","15":"tag-nyc","16":"tag-scott-rechler"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/43314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=43314"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/43314\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/43315"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=43314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=43314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=43314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}