Judge Clears Path For Barnett’s Worldwide Plaza UCC Sale

A judge rejected a bid by SL Green and RXR to stop a UCC sale tied to Worldwide Plaza, clearing the way for Extell to move ahead with a foreclosure auction.

Judge Andrea Masley denied the landlords’ request for a preliminary injunction that would have blocked a UCC foreclosure sale of the mezzanine loan secured by the 49-story office tower at 825 Eighth Avenue, according to a decision issued on Tuesday in state Supreme Court.

The dispute pits three of New York’s biggest real estate players against one another: SL Green’s Marc Holliday, RXR’s Scott Rechler and Extell’s Gary Barnett. SL Green and RXR are the current owners of Worldwide Plaza. Extell, meanwhile, quietly acquired the senior mezzanine debt on the 1.8 million-square-foot office complex this fall.

“We’re disappointed in the most recent ruling, however, we still own and control the asset and we believe we will ultimately reach a resolution with the mezz lender which meets all parties’ objectives,” an SL Green spokesperson said.

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

Extell 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 ultimately sided with Barnett, emphasizing in her ruling that contracts must generally be enforced, especially when negotiated by “sophisticated, counseled businesspeople,” even if market conditions have changed since the deal was struck.

Goldman Sachs and Deutsche Bank provided $190 million of senior mezzanine debt in 2017 that was later transferred to Korea-based Shinhan Financial Group, which sold it to Extell.

Worldwide Plaza 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.

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.

Extell is the only qualified bidder lined up for the auction, but Masley said that does not render the sale commercially unreasonable.

“Our position on Worldwide Plaza has long been clear — while we moved the asset into our Alternative Strategy Portfolio over two years ago given that we attribute little to no value to the asset, we have a plan to revitalize the building and the capital to execute it,” the SL Green spokesperson said.

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