Vornado Snatches Rescue of 650 Madison Avenue

Two months ago, it seemed Vornado Realty Trust’s ownership of 650 Madison Avenue was coming to an end. But Steven Roth was able to hold onto the building.

Vornado is free of special servicing at the Plaza District office building after fulfilling its obligations on the $800 million mortgage backing the property, Crain’s reported. The loan is considered current and ownership prefunded shortfalls for the next 12 months, as well as a $1.5 million leasing reserve, according to Morningstar Credit Analytics.

No modification was made to the mortgage, which matures in three years. Ownership also dodged a workout fee from the special servicer.

It’s an abrupt improvement of fortunes for an ownership group that also includes Oxford Properties Group and the Ontario Municipal Employees Retirement System, none of whom commented on the latest development.

The debt behind the Class A office building was sent to special servicing in October after the borrower failed to meet payment obligations. A month later, a Piper Sandler analyst predicted the building’s lenders would soon take possession of the property and work on a quick sale.

Ownership secured a $214 million refinancing for the property in 2019. But revenue and occupancy quickly fell off.

Occupancy was 97 percent when the loan was issued, but Ralph Lauren — which once leased over 40 percent of the space in the building — downsized by 39 percent and is paying about 30 percent less in rent.

Occupancy dropped to 57 percent in 2024, according to Morningstar, but is all the way back up to 98 percent, per CoStar. Office tenants include Lakewood Capital, while retail space is occupied by Celine, Moncler, Balmain, Cremieux, Tod’s and others.

At its most recent appraisal, the property saw its value fall; once estimated to be worth $1.21 billion, 650 Madison was appraised at $950 million.

The 28-story office and retail building totals 595,000 square feet. It was purchased by Vornado, Oxford and the pension fund in 2013 for roughly $1.3 billion.— Holden Walter-Warner