RXR Cedes “Digital” Midtown Office Building to Lender

Just because it’s “digital,” doesn’t mean it’s viable.

The developer lost control of 340 Madison Avenue, an office building in Midtown Manhattan, Crain’s reported. Massachusetts Mutual Life Insurance subsidiary Barings purchased the property at auction on Thursday for $161 million.

At least three prospective bidders appeared interested in the property prior to the auction, according to court records. Barings, however, was the only qualified bidder to actually attend the event last week.

In May, MassMutual filed a complaint against Rechler’s firm after it defaulted on a $315 million mortgage, which matured earlier in the year. A spokesperson for the company said at the time that the property was high quality, but had a “broken capital structure.” RXR had identified the building as “digital” as opposed to “film,” meaning it was part of the company’s portfolio that was deemed worth keeping.

A loan modification was still a possibility at the time. As of May, there were about 300,000 square feet available, representing 40 percent of the building’s total rentable area.

RXR in April leased about 7,000 square feet to investment firm Yaupon Capital Management and 5,500 to Northampton Capital Partners, an infrastructure and energy-transition investment firm led by a former Apollo Global Management executive. RXR also signed renewals with SRS Real Estate Partners and Edelman Financial Engines and new leases with investment firm Tide Rock and Boundary Creek Advisors.

The 22-story, 760,000-square-foot building has estimated asking rents between $68 and $83 per square foot, according to CoStar.

An RXR representative declined to comment to Crain’s on the auction.

In better news for Rechler, RXR and SL Green worked out a deal on the $940 million mortgage backed by Worldwide Plaza on Eighth Avenue. The borrowers, which also include a subsidiary of the liquidating company for New York REIT, will use loan reserves to fund operating expenses and debt service shortfalls, according to Morningstar; the loan is still set to come due in November 2027.

— Holden Walter-Warner