Aby Rosen's RFR Facing $2.5B Debt Bill As Defaults Pile Up
RFR’s office portfolio is filled with some of New York City’s best-known properties. But the loans it took out to finance those buildings and their upgrades are now coming due, raising questions about whether the landlord will be able to come up with the cash in time to pay them off.
Aby Rosen’s RFR has around $2.5B of loans that will either mature within the next year or are already due, according to an analysis of public data by The Financial Times.
Those maturities are arriving as the cost of borrowing is high and while the values of office properties are struggling to recover post-pandemic.
That multibillion-dollar sum is spread across 16 loans and is connected to more than 20 properties, some of which RFR owns alone and some of which it owns with partners. Those properties generated around $26M in rent last year after interest payments — but they were expected to generate $97M, according to the FT.
Around 12 loans are distressed, four buildings aren’t covering their mortgages and two are nearly empty or at risk of becoming so, including a Brooklyn office previously fully occupied by WeWork, the FT reported.
“RFR has a global portfolio of approximately 100 properties, 90% of which are healthy and well-leased,” an RFR spokesperson said in a statement to Bisnow. “The few properties currently experiencing market stress constitute only a minor fraction of our overall portfolio. We are actively engaged in restructuring the debt and stabilizing cash flows on these assets to strengthen their fundamentals for the long term.”
The Seagram Building at 375 Park Ave. is among the buildings RFR built its reputation on but where it now faces difficulty. Rosen teamed up with Michael Fuchs in 2000 to buy the property for $375M through their company, RFR Holding.
They poured tens of millions into upgrades for the 1958-built skyscraper — the first in NYC with floor-to-ceiling windows — and kept the property near full occupancy. Today, the property is “fully leased with an investment grade tenancy,” RFR's spokesperson said.
Despite that, the Seagram Building faces big difficulties. RFR refinanced $400M for the property in December but still owes $750M on a loan issued in 2013.
The Seagram Building isn’t the only property where RFR is staring down looming debts. Around $470M owed on 285 Madison came due last week, even though the 26-story property was 97% occupied at the end of 2023, according to an analysis from Morningstar Credit last month.
The building also had a debt service coverage ratio of 1.11 at the time, according to Morningstar Credit. But 285 Madison was worth $610M when RFR borrowed for the property in 2018, and it has since lost $60M in value, the FT reported.
RFR also co-owns the Chrysler Building with Signa Holdings, which filed for insolvency last November and is seeking to sell its half of the property to raise funds. The property is 90% leased, according to the FT, but could see its value impacted if its expensive ground lease results in a low-price sale.
RFR is also facing a handful of lawsuits, the FT reported. The company has missed mortgage payments and a property tax bill at 522 Fifth Ave., with a total cost of $9M, and it faces foreclosure on a Miami Beach retail property.
A former executive is suing the company for two missed deadlines on payments linked to an exit package agreed on in 2019. And Blackstone is suing for nearly $50M for one of the loans it bought with partners as part of the sale of Signature Bank’s books.
RFR isn’t the only company facing the pressures affecting commercial owners, the company said. Another of New York's most prominent office owners, Charles Cohen, has piled up more than $1B of defaults as creditors seek to seize some of his prized buildings.
“No one invested in real estate is immune to the pressures from fluctuating capital markets or the changing trends in work and lifestyle that we are currently seeing,” RFR's spokesperson said. “We still love the business we are in.”
