A towering office building at 61 Broadway in the Financial District has gone into default, after owners RXR Realty failed to pay a $240 million dollar mortgage. The maturity default officially occurred on May 1st, although the firm headed by Scott Rechler had reportedly stopped payments as far back as December.
According to The Real Deal, the mortgage was secured by Aareal Bank, a German financer. RXR also sold a 49 percent stake in the property (about $216 million dollars) to China Orient Asset Management, then bringing the total valuation up to $440 million. Now, bidding by lenders on the property will commence by next month. This comes as the commercial market for office leases is positively in turmoil in the downtown area as remote work persists, with a conversion to housing units being actively considered for the building at 61 Broadway (RXR Realty reportedly floated this transition this before ultimately defaulting).
RXR CEO Rechler himself predicted this outcome in another interview with The Real Deal, bluntly stating that “In my opinion, we can’t do anything with some of [our downtown properties].” He further added that he was ready to “give the keys back to the bank.” It seems this outcome has come to pass.