SL Green and RXR Realty’s Worldwide Plaza could find themselves in a world of hurt if two of its biggest tenants jump ship.
Wall Street securities firm Evercore ISI recently reported an implied value for the Midtown Manhattan complex of $1.2 billion, down nearly a third from $1.7 billion in 2017, according to Crain’s. The estimated valuation breaks down to $600 per square foot.
SL Green and RXR acquired a 49.9 percent interest in the property at the $1.7 billion valuation seven years ago. The majority interest is owned by New York REIT, which is in the process of liquidating.
The 2 million-square-foot complex includes retail space, residential space and a 49-story office building.
Law firm Cravath Swaine & Moore, which occupies a third of the office space and pays roughly half the building’s rent, is set to decamp for Two Manhattan West in August. Japanese investment bank Nomura Holdings is also exploring a move from the property, where it occupies 40 percent of the rentable area.
Cravath’s 600,000-square-foot space has been available for more than four years, according to Wharton Property Advisors’ Ruth Colp-Haber, who added it would take about $90 million to update the space for an incoming occupant.
“If they can’t re-lease it and ultimately hand the keys back [to lenders], there’s not a lot of equity value,” Evercore analyst Steve Sakwa said.
Worldwide Plaza backs a $940 million loan. The upcoming lease rollover resulted in the debt being watchlisted during the fall. The loan comes due in 2027, the same year Nomura can exercise an option to leave its lease six years early.
New York REIT’s liquidation is creating its own confusion. A report last October from Kroll Bond Ratings said the real estate investment trust indicated it was looking to sell Worldwide Plaza, perhaps by April. A source familiar with the property, however, told Crain’s the building isn’t for sale.
RXR, SL Green and New York REIT all did not comment to Crain’s about the Evercore ISI analysis.
— Holden Walter-Warner