RXR Explores Conversion Of 230 Park Following $670M Default

RXR Realty is looking to convert a portion of the historic Helmsley Building on Park Avenue in a bid to rescue the building from its debt distress.

The firm, run by Scott Rechler, is exploring a partial conversion of the 1.4M SF landmark following a default on the $670M loan that matured Dec. 8, according to commentary provided by Morningstar Credit.

RXR was provided a 90-day forbearance to further explore conversion potential of the 34-story office building at 230 Park Ave. As of May 17, the building was 84% leased, according to Morningstar.

The Real Deal first reported the possible conversion. RXR didn't respond to Bisnow’s request for comment.

Servicer commentary said reuse could “significantly impact value.” It didn't specify what kinds of reuse RXR is exploring, though residential has been most common among office owners. 

In May, New York City’s Office Conversion Accelerator program said it has received interest from 64 office landlords considering conversions, though that doesn't mean that all those conversions will take place.

So far, most office-to-residential plans in the works have been in the Financial District. Nearly 3,000 residential units are in the pipeline for the Lower Manhattan neighborhood, many of which are conversions from office buildings, according to a report by the Alliance for Downtown New York.

The largest conversion in the city's pipeline is just a few blocks away at 219-235 E. 42nd St., where David Werner and Nathan Berman are about to kick off the process of turning 973K SF of former Pfizer headquarters space into 1,500 apartments.

But conversions will likely spread depending on the city’s passage of City of Yes legislation, which had its first public hearing last week. The proposal would lift restrictions to make it easier to convert older office buildings and ​​other nonresidential buildings to housing.

Conversions also featured in the housing deal included in the state budget this year. Developers of properties south of 96th Street in Manhattan can be exempt from the vast majority of their property taxes if they convert offices to housing and reserve a portion of the new units as affordable.