RXR Modifies $1.2B Sixth Avenue Office Loan With $220M Equity Injection
RXR Realty has modified a massive maturing loan on one of its Midtown office properties, an example of the lengths owners must go through to deal with debt that is expiring.
RXR has negotiated a modification of the $1.2B loan tied to the 1.8M SF building at 1285 Sixth Ave., agreeing to put up $220M of equity for reserves and to push the loan balance down to $980M, The Real Deal reports.
The debt maturity was extended out by five years, and the senior loan interest rate went from 4% to 6%, RXR President Michael Maturo told TRD. The loan is owned by Morgan Stanley and AIG.
The new arrangement also features a $60M facility for capital costs down the track.
The original loan from 2016 matured in March when borrowers RXR, David Werner and China Life Insurance Co. locked down a short extension. Scott Rechler-led RXR's attempts to get the loan refinanced didn't work out.
“Everyone’s very confident in this building,” Maturo told TRD. “It’s got very strong cash flow, and this was very helpful in getting [the lenders] feeling good about doing an extension and modification on the loan.”
He added the property is fully leased, and that the hope is that in five years, the environment will be a more favorable one for refinancing.
How office owners approach their maturing loans and how modifications take place have come under intense scrutiny this year as tens of billions are set to come due. More than 88% of office CMBS loans that matured in September failed to pay off, according to Moody's Analytics.
Several high-profile office owners have opted to walk away from office buildings in the city, including Brookfield and Blackstone. Others, including Aby Rosen’s RFR, have managed to arrange for modifications and extensions. RXR defaulted on a loan at 61 Broadway earlier this year and last month entered into a deed-in-lieu-of-foreclosure agreement with its lender.
