Judge Delays Gary Barnett’s Worldwide Plaza UCC Sale

A Manhattan judge has hit pause on a UCC sale tied to Worldwide Plaza in a high-stakes legal brawl among three of New York’s biggest real estate players.

In an order filed Wednesday, the judge temporarily stopped the foreclosure auction for the controlling entity of 825 Eighth Avenue, which Gary Barnett’s Extell Development had scheduled for January 15. The decision postpones the auction until January 29 and keeps the current ownership structure in place for now.

The ruling came after landlords SL Green and RXR sued to block the sale, arguing it was a “sham” designed to wrest control of the Midtown office complex without a fair, competitive process. The firms claim the proposed auction was structured to chill bidding and steer the asset to Barnett.

Extell has pushed back hard against the allegations, calling RXR and SL Green’s lawsuit meritless and accusing the two developers of trying to derail a sale they have known about for months. Barnett’s camp argued in a legal filing that the mezzanine lender is within its rights to foreclose after a default and that the auction was properly noticed and structured.

The judge directed Barnett to produce further documentation on whether the planned auction is commercially reasonable as the court weighs whether the foreclosure may proceed. Barnett must show that the auction terms comply with the Uniform Commercial Code and are not designed to chill bidding, according to the ruling. Barnett has until January 23 to respond to nine questions Judge Andrea Masley raised about the auction.

“We’re obviously happy with [the decision],” said Stephen B. Meister, a lawyer for SL Green. “We think it’s a thoughtful decision by Judge Masley.”

Worldwide Plaza, a 1.8 million-square-foot office complex near Columbus Circle, has been a prime example of the office market’s continued distress. Control of the mezzanine debt would give the winning bidder significant leverage over the property’s future.

Goldman Sachs and Deutsche Bank provided $190 million of senior mezzanine debt in 2017 that was later transferred to Korea-based Shinhan Financial Group. Extell apparently bought the loan last year.

The property is backed by $940 million in senior CMBS debt that went to special servicing in September 2024 after law firm Cravath, Swaine & Moore vacated 617,000 square feet, leaving Worldwide Plaza about 40 percent vacant. The landlords defaulted on both senior and mezzanine debt in July, per public filings.

RXR declined to comment. An Extell spokesperson did not immediately respond to a request for comment.