RXR Holds On To Chelsea Landmark, Sells 50% Stake To Hudson Bay Capital
RXR is holding on to its mixed-use building at 620 Sixth Ave. by selling the building into a 50-50 partnership between investment firm Hudson Bay Capital and RXR's Office Recovery Fund.
The deal, which RXR described as a recapitalization of the asset, comes with a $320M, five-year loan, RXR announced Friday.
The debt was furnished by Goldman Sachs and Blackstone, Commercial Observer reported. Loan documents filed with the city show an entity tied to Blackstone Mortgage Trust provided a $334M senior mortgage, which consolidates the previous loans totaling $421.5M, The Real Deal reported.
RXR first purchased a 55% stake in the Gilded Age-era building in September 2011. The following year, the Scott Rechler-led firm secured full ownership, buying out the remaining interest in the Chelsea property from the then-joint venture between the Chetrit Group, YL Real Estate and Bonjour Equities, GlobeSt reported at the time.
More recently, the 500K SF property has been subject to challenges related to both its office space and retail tenant base. The recent bankruptcies of WeWork and Bed Bath & Beyond caused more than half of the building to become vacant.
The big-box retailer occupied 92K SF of the building for nearly three decades before shuttering. Since it moved out, RXR has struggled to fully replace it — with even a Spirit Halloween deal falling through.
But not all of the retail space was emptied out with Bed Bath & Beyond’s departure. T.J. Maxx and Marshalls are also retail tenants in the building.
RXR said in a statement that it is in negotiations with tenants looking to take over the remaining vacant retail space. The developer expects the cast-iron building, which was constructed in 1896, to be fully leased within the next six months.
In the office portion of the building, RXR has quickly replaced WeWork, signing more than 300K SF of new and renewal leases in the last two years.
That includes Palantir Technologies, which had occupied the building via WeWork. In May, the data analytics and intelligence firm signed a direct contract with RXR to take 140K SF in the building, Commercial Observer reported at the time.
Mobile banking app Current did the same, signing a direct deal for 71K SF following WeWork’s exit.
Cole Haan also renewed its 62K SF office lease, locking in for another 11 years, according to CO. Labor union 32BJ also expanded its space in a 20-year renewal, adding 20K SF to its 245K SF office.
Those deals brought the office portion of the building to 100% occupancy.
“This recapitalization, combined with overwhelming tenant demand both in the office and retail market, demonstrates that by applying capital and capabilities to the right asset with the right capital structure, iconic buildings like 620 Avenue of the Americas can thrive in a post-pandemic world,” Rechler, RXR's chairman and CEO, said in a statement.
