RXR Defaults on $315M Loan Secured by 340 Madison Avenue in Manhattan
Boston-based lender MassMutual has filed a foreclosure notice against RXR and its partners on the building
340 Madison Avenue. PHOTO: Courtesy RXR Realty
Scott Rechler’s RXR is dealing with another unhappy lender.
Boston-based lender MassMutual, a subsidiary of Massachusetts Mutual Life Insurance, has filed a $315 million pre-foreclosure action against RXR and several partners for defaulting on a loan secured by 340 Madison Avenue, a 22-story office building in Midtown Manhattan.
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PincusCo first reported the default.
RXR failed to pay off the senior loan at its scheduled maturity date of Aug. 1, 2023, and failed to pay in February 2024 after receiving an extension. MassMutual sent RXR a default notice on Feb. 5, 2024.
Even after written notices were sent to RXR, the firm still failed to pay the balance on the loan, leading MassMutual to seek a judgment of foreclosure and sale to foreclosure upon the property and sell it to pay off the loan, a complaint MassMutual filed May 17 in New York State Supreme Court.
With almost 750,000 square feet and a 10,000-square-foot amenity center, 340 Madison is a Class A office complex a block from Bryant Park in Midtown Manhattan. Built in 1928, the property was fully renovated in 2006, while the lobby and entrance were renovated in 2020. Notably tenants include PNC Bank and Barings; former tenants include Facebook.
RXR and its principal partners, which include Affinius Capital, formerly known as USAA Real Estate, purchased the office building in July 2011 for $570 million, and secured a $305 million loan from MassMutual to do so, per legal records. The deal was among the first big Manhattan purchases for Rechler and RXR, one of borough’s largest office owners, which was described by the New York Post 13 years ago as, “a Uniondale, Long Island-based firm.”
The default on 340 Madison Avenue is the latest in a series of potentially strategic defaults by RXR. Rechler told CO in early 2023 that RXR “won’t throw good money after bad” when assessing the firm’s office portfolio.
Last spring, RXR nearly lost its 33-story office tower at 61 Broadway in the Financial District after defaulting on a $240 million loan that matured May 1. The deal is now being worked out, CO reported last month.
In November, the $670 million single-asset, single-borrower CMBS loan secured by 230 Park Avenue — also known as The Helmsley Building — transferred to special servicing on Nov. 2 due to “an imminent maturity default.” RXR told CO that the firm was in discussions with lenders about restructuring the loan.
RXR has inaugurated its strategic “Project Kodak,” which Rechler has previously described as an attempt to divide the firm’s assets between those buildings which are digital, and worth keeping into the future, and those that the firm considers film, and worth walking away from.
“340 Madison is a building that we identified as a ‘digital,’ high-quality building with a broken capital structure,” said David Garten, senior advisor at RXR. “We have been in active discussions with the lender to restructure the $315 million mortgage, which is a non-recourse loan with no guarantor.”
Brian Pascus can be reached at bpascus@commercialobserver.com
340 Madison Avenue, 61 Broadway, David Garten, Scott Rechler, Affinius Capital, Massachusetts Mutual Life, RXR, USAA Real Estate
