RXR, one of the owners of 1211 Avenue of the Americas in Midtown Manhattan, has struck a deal to extend its $1.04 billion commercial mortgage-backed securities (CMBS) loan at the trophy property.
Previously, the CMBS was originated by J.P. Morgan, Morgan Stanley and Citigroup in 2015. Recently, it hit special servicing, with the mature date set for August 2025. However, it has now been modified to include a three-year extension, according to a report from the Commercial Observer.
Overall, 1211 Avenue has been prominent in the news cycle over the past year or so. First, Fitch Ratings warned that the debt service coverage ratio of the total debt was only 0.97x in 2024. That's well below the typical 1.20x considered healthy for office buildings.
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Despite that, RXR decided to take a leap of faith and buy a 49 percent stake in 1211 Avenue from Ivanhoé Cambridge, according to a January report from Bloomberg.
But a couple of other issues have arisen since then. Crain's New York Business reported that Rupert Murdoch's media brands, which operate through Fox Corp. and News Corp., are expected to trim their footprint at the office property by nearly 330,000 square feet. Those fears led to KBRA downgrading 1211 Avenue's $1 billion mortgage, citing the potential loss of Fox Corp.
"The rating actions follow a surveillance review of the transaction and reflect a decline in KNCF and KBRA value since last review and securitization stemming from high upcoming lease rollover," the credit agency warned.
So there's potential headwinds that lie ahead if RXR and its 51 percent controlling partner can't fill the potential vacant space.
But RXR does have an ambitious plan, where it will invest $300 million into the office asset and be responsible for 49 percent of the debt for the building.
While New York remains one of the nation's top recovering office markets, April represented a slowdown in activity. Leasing volume was 3.38 million square feet, representing a 26.2 percent decrease from the previous month, according to a report from Colliers. However, the category was up 23 percent year-over-year and 25.4 percent above the 10-year monthly median, suggesting that the market remains in a good place.
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