RXR Recapitalizing 55 Broad Street Conversion

Scott Rechler’s RXR is leading a $500 million recapitalization of 55 Broad Street — one of the first big office-to-residential projects of the recent conversion craze.

RXR has entered an agreement to form a joint venture with developers Silverstein Properties and Metro Loft Management, sources told The Real Deal.

The deal to recapitalize the 571-unit building is a litmus test for the office-to-resi market. Developers like Silverstein and Metro Loft have gotten to work converting outdated office buildings on the bet that they can sell those properties to long-term holders once they’re finished.

The specific details of RXR’s investment weren’t clear, though one person described it as a preferred-equity investment. That would be a temporary type of financing that would allow the owners to refinance their construction loan while they finish leasing up the tower.

The building was 76 percent occupied when it hit the market in September.

A spokesperson for RXR declined to comment, while representatives for Silverstein and Metro Loft did not immediately respond to requests. A Newmark team led by Adam Spies and Adam Doneger arranged the deal.

Silverstein and Metro Loft initially struck a deal to buy the former Goldman Sachs headquarters from Rudin for $180 million in 2022, but the sale was pushed as interest rates rose. The deal ultimately closed the summer of 2023 for $172.5 million, a roughly 4 percent discount from the initial price.

The developers financed the project with a $220 million construction loan from Mexican billionaire Carlos Slim’s Banco Inbursa. Ares Real Estate also has a stake, as does Rudin, which retained a piece of the deal after the sale.

There are a handful of other large conversions that, like 55 Broad, will look for a long-term buyer once they’re done.

They include Metro Loft’s 1,600-unit conversion of the former Pfizer headquarters in Midtown at 219-235 East 42nd Street with partner David Werner

Metro Loft and partners GFP Real Estate and Rockwood Capital last year refinanced their 1,320-unit conversion of 25 Water Street with an $835 million debt package from Apollo and GIC.