RFR slapped with $224M pre-foreclosure as overdue debts pile up

Firm failed to pay off 522 Fifth Avenue’s loan at maturity

RFR’s Aby Rosen, 522 Fifth Avenue (Getty, RFR)
RFR’s Aby Rosen, 522 Fifth Avenue (Getty, RFR)

As Aby Rosen’s blockbuster sale of 980 Madison Avenue hit property records last week, another lender sought payback from his beleaguered firm.

Column Financial, a Credit Suisse affiliate and RFR Holding’s lender on 522 Fifth Avenue, filed to foreclose last Tuesday, claiming the landlord failed to pay off a $224 million mortgage at maturity.

That adds to a pile of defaults and unpaid bills for RFR, according to lawsuits lodged by lenders and a former employee. A spokesperson for RFR declined to comment.

Rosen’s firm tapped Column for the $224 million acquisition loan in 2020 when it bought the 23-story Fifth Avenue building from Morgan Stanley for $350 million. The Grand Central-area property was once Morgan Stanley’s wealth management headquarters. 

The loan is floating-rate, according to Column’s complaint, which could explain the default: Rates shot up 525 basis points starting in March 2022.

The complaint alleges RFR defaulted on multiple fronts. 

First, RFR failed to make a “true-up payment” into an account its loan servicer tapped to pay property taxes. The servicer covered the nearly $1.7 million shortfall and demanded reimbursement but RFR failed to plug the hole. In January, Column sent a notice of default.

The same month, RFR quit making payments into another account for interest rate caps, Column alleges. Such caps are like an insurance policy: If floating-rate borrowers’ interest payments exceed a certain threshold, the rate cap provider picks up the extra cost.

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RFR defaulted on about $1.8 million in undeposited rate cap payments.

Rosen’s firm also failed to send over financial statements for the property — a third default trigger.

The downward spiral was writing on the wall for RFR’s maturity default in March when the owner failed to pay off the $224 million mortgage, the lawsuit claims. 

Newmark’s Adam Spies and Josh King are shopping the loan for sale, marketing materials show.

This year alone, RFR has defaulted on an $80 million mortgage backed by a Gowanus development site, $39 million in promissory notes tied up in the Signature Bank loan sale and a $15 million mortgage collateralized by a Miami Beach retail building.

A $105 million loan tied to 90 Fifth Avenue — an 11-story Union Square office building — landed in special servicing in March after RFR fell behind on property taxes. Also, a former RFR executive in April sued Rosen and his partner Michael Fuchs, alleging they failed to pay him $20 million of a $25 million payment promised when he left the company.

RFR also defaulted on a Dumbo office portfolio it owns with Kushner Companies late last year after it could not find a lender willing to refinance the properties’ jumbo loan. Last month, the firms somehow secured a four-year extension of the $480 million debt despite a recent reappraisal that cut the building’s valuation to $207 million. The firms injected more equity into the deal but have not disclosed how much.

Amid those struggles, RFR sold 980 Madison Avenue — an art gallery, office and retail building — and the land under it last week for $560 million. An entity affiliated with Michael Bloomberg reportedly bought the property after Bloomberg Philanthropies last fall agreed to lease 86 percent of the building, renowned for the Venus sculpture that stands sentry above the front doors.
RFR is also trying to unload Gramercy Park office building 281 Park Avenue South, which scammer Anna Sorokin, also known as Anna Delvey, once eyed for her nightclub. The sale is Rosen’s second attempt in as many years. In 2022, the tycoon was asking $135 million for the six-story, landmarked building.

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