SL Green, RXR Nab Mod on $940M Worldwide Plaza loan

From the depths of delinquency, RXR and SL Green have emerged with a workout.

The sponsors on the $940 million mortgage backed by Worldwide Plaza, an office behemoth at 825 Eighth Avenue, locked down new terms on a deal that landed in special servicing late last year, according to a Morningstar Credit Newsflash released Thursday morning.

The modification let the borrowers, which also include a subsidiary of the liquidating company for the now-dissolved New York REIT, use loan reserves to fund operating expenses and debt service shortfalls, according to Morningstar.

There is no mention of an extension; the loan comes due in November 2027, according to Morningstar.

RXR did not immediately respond to a request for comment.

SL Green in a statement described Worldwide Plaza as an “iconic” asset with an “exceptional block of space” at the top that would draw demand as availability for those layouts “continues to tighten”

“The mortgage loan is current and the existing reserves service the present needs of the property while we develop a robust repositioning plan,” the firm added.

The sponsors on Worldwide Plaza ran into trouble when its tenant, law firm Cravath, Swain & Moore, left its office space, depleting nearly half of the building’s rent roll and one-third of its tenant roster.

Ahead of the exit, the building had already lost one-third of its value, according to an Evercore ISI report that cited an implied value of $1.2 billion.

The law firm’s departure last August triggered a cash trap provision that froze $22.4 million in reserves set aside for tenant improvements, including renovations or leasing incentives.

$20 million of that money was instead applied to financial shortfalls, Morningstar details, as the $22.4 million in reserves is now $1.9 million.

The workout comes about a month after SL Green and RXR lost a suit with New York REIT that denied the firms access to a $90 million pot of reserves. The money had been set aside to help lease the Cravath Swaine & Moore vacancy; but the parties squabbled over the contract language, and a New York judge ultimately sided with the REIT.
As of October, the building was about 68 percent leased.

This article has been updated with a comment from SL Green.