Worldwide Plaza Valuation Nosedives by $1.4B from 2017

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Worldwide Plaza’s market value has cratered, wiping out the equity of its owners and threatening another body blow to Midtown’s trophy office market.

The 1.8 million-square-foot tower at 825 Eighth Avenue was appraised at $345 million in April, an 80 percent drop from its $1.7 billion valuation in 2017, according to CMBS loan documents obtained by Bisnow.

SL Green and RXR acquired a roughly 49 percent stake in 2015, with the now-liquidating New York REIT holding the majority. The property is backed by $940 million in CMBS debt originated by Goldman Sachs and Deutsche Bank, plus $260 million in mezzanine financing.

The debt landed in special servicing in September after law firm Cravath, Swaine & Moore vacated its 617,000-square-foot space for Brookfield’s Two Manhattan West, leaving Worldwide Plaza about 40 percent vacant.

DBRS Morningstar downgraded several CMBS classes last summer, citing the revenue hit and operating shortfalls that forced the special servicer to dip into reserves.

A January loan modification freed more reserves to cover the gap, but that fix expired in July. SL Green and RXR are reportedly in talks for another workout to unlock the tens of millions needed to backfill space.

Those plans may face a harsher reality if Nomura Holdings, the tower’s largest tenant with 700,000 square feet, moves ahead with a rumored jump to Vornado’s Penn 2. While Nomura’s lease runs to 2033, it has a termination option in 2027, which it had to exercise by July 1; it’s unclear if it did so.

The 49-story property — built in 1989 as part of a 2 million-square-foot complex with condos, theater space and a public plaza — is the last asset held by New York REIT, which had been sparring with SL Green and RXR in court over a $90 million reserve. A judge ruled in February the money belongs to the REIT.

Worldwide Plaza’s collapse is part of a broader trend of Manhattan office towers with pre-pandemic debt facing steep write-downs. This week, Charles Cohen’s 750 Lexington Avenue was appraised at $41 million, down from $300 million in 2015.

— Holden Walter-Warner