RXR Partners JV Secures $320M Recap for NYC Building

October 21, 2024

Mixed Use Finance Investment New YorkMoreNews Northeast Office Retail

Goldman Sachs and Blackstone are among the historic property’s lenders.

RXR, through its Office Recovery Fund, has partnered with Hudson Bay Capital to share ownership of and reposition 620 Ave. of the Americas, a historic 500,000-square-foot office and retail building in Manhattan’s Chelsea neighborhood.

620 Ave. of the Americas is a historic office and retail building in Manhattan's Chelsea neighborhood. — 620 Ave. of the Americas is a historic office and retail building in Manhattan’s Chelsea neighborhood. *Image courtesy of CommercialEdge*

As part of the transaction, the joint venture secured a five-year, $320 million loan facility. Lenders include Goldman Sachs and Blackstone, according to a report by The Real Deal.

The owners are touting the mixed-use building’s location, high ceilings, 100,000-square-foot-plus floorplates and vintage architectural elements as attractive to varied retail and office tenants.

The seven-floor building came online in 1896, according to CommercialEdge information. RXR acquired a 45 percent interest in the property for $225 million from The Chetrit Group in January 2012 and the remaining 55 percent in November 2012 for $255.6 million.

However, it was a $425.1 million refinance by Goldman Sachs in October 2019—just months before the World Health Organization officially declared the COVID-19 outbreak a pandemic—that put the building on a tricky course. Two prominent tenants, WeWork and Bed Bath & Beyond, went bankrupt, pushing the building to more than 50 percent in total vacancy.

Over the past two years, however, RXR nailed down more than 300,000 square feet of new and renewal leases to office tenants and induced long-time tenant 32BJ, an affiliate of the Service Employees International Union and the nation’s largest union of property service workers, to expand its lease by 21,000 square feet.

As a result, the building’s office component is fully occupied, and RXR reported that it’s in negotiations with multiple potential tenants for the remaining vacant retail space.

Leases vs. sales

Clearly, not all of 620 Ave. of the Americas’ neighbors are doing as well, because Manhattan’s Chelsea submarket currently has a total availability of 27.5 percent, according to a third-quarter report from Avison Young. That’s somewhat higher than the average for all of Midtown South, which is 21.2 percent, and higher still than the overall Manhattan average of 18.7 percent.

Transactions nonetheless seem to be ticking along. Three times so far this year, Chelsea properties have landed on Commercial Property Executive’s monthly tally of the top five NYC office building sales:

• In January, it was Argentic Investment Management’s $21.5 million sale of 115 Seventh Ave., a 42,380-square-foot, 1924-vintage building, to Raymond Chan Architect PC.

• In April, we reported the $31 million sale of 129 W. 29th St. by Samson Management to The Epoch Times, part of The Epoch Media Group. The 85,869-square-foot building was completed in 1911.

• And in May, a private investor acquired the 7,410-square-foot 156 W. 29th St. for $6.3 million from a private seller, in a deal brokered by Cushman & Wakefield.