Key Takeaways
- • San Francisco-based hedge fund Farallon Capital Management has come in as an equity investor in RXR's 75 Rockefeller Plaza, according to sources told The Real Deal.
- • Farallon's investment values the 627,000-square-foot tower at roughly $190 million to $200 million, well below the $260 million in debt RXR placed on the property in 2022.
- • Lenders agreed to split the mortgage into a primary A note and a B "hope note" repaid only if the building performs well, per a person familiar with the deal.
- • The 2022 financing implies the property has lost more than half its value in three years, if underwritten at a 60 percent loan-to-value.
- • The deal is RXR's seventh recapitalization in two years across 9 million square feet under its "3R" strategy.
Summary
RXR brought San Francisco-based hedge fund Farallon Capital Management into 75 Rockefeller Plaza, the 33-story tower that serves as RXR's headquarters, according to sources told The Real Deal. Farallon's investment values the 627,000-square-foot property at between $190 million and $200 million, according to a source familiar with the deal. That figure sits well below the $260 million in debt RXR placed on the property in 2022, when it secured a refinancing from Bank of America and the Carlyle Group.
As part of the transaction, Scott Rechler restructured the property's debt. One person familiar said lenders agreed to split the mortgage into a primary A note and a B "hope note" that will be repaid if the building performs well. The Real Deal noted that the 2022 financing was arranged during the work-from-home era, when lenders were highly cautious about office assets. Newmark's Adam Spies and Adam Doneger led the team serving as RXR's capital advisor, and JLL's Drew Isaacson acted as structuring advisor.
Rechler described 75 Rock as 95 percent leased to tenants including Merrill Lynch, American Girl and Guidehouse, with rents exceeding $100 per square foot. In a statement, he said RXR's conviction in premier properties in world-class locations remains intact. He also said the recapitalization is the company's seventh in the past two years across 9 million square feet under its "3R" strategy of resetting basis, restructuring debt and re-tenanting space. RXR declined further comment, and Bank of America and Carlyle Group did not immediately respond to requests for comment.
The valuation has fallen sharply from earlier marks. If the 2022 loan had been sized at a conservative 60 percent loan-to-value, the property would have been valued at about $433 million, and the new figure is more than half lower. RXR had also valued the building at a reported $500 million when it bought the 99-year ground lease in 2013, and invested $150 million in renovations in 2017. WeWork's termination of its roughly 300,000-square-foot lease in its 2023 bankruptcy restructuring and the collapse of a 2019 Airbnb conversion plan add to the building's leasing history.
Farallon, founded in 1986 by Tom Steyer, has a real estate business that raised a $650 million fourth U.S. opportunistic fund in 2023. Its property arm is run by Avner Husen, formerly a manager at Blackstone's BREIT. The firm teamed with Fetner Properties and MCB Real Estate to buy the 463-unit 240 Willoughby Street in Fort Greene for $210 million in July, and bought 85 East End Avenue, a 74-unit luxury rental, for $75 million last year.
As part of the transaction, Scott Rechler restructured the property's debt. One person familiar said lenders agreed to split the mortgage into a primary A note and a B "hope note" that will be repaid if the building performs well. The Real Deal noted that the 2022 financing was arranged during the work-from-home era, when lenders were highly cautious about office assets. Newmark's Adam Spies and Adam Doneger led the team serving as RXR's capital advisor, and JLL's Drew Isaacson acted as structuring advisor.
Rechler described 75 Rock as 95 percent leased to tenants including Merrill Lynch, American Girl and Guidehouse, with rents exceeding $100 per square foot. In a statement, he said RXR's conviction in premier properties in world-class locations remains intact. He also said the recapitalization is the company's seventh in the past two years across 9 million square feet under its "3R" strategy of resetting basis, restructuring debt and re-tenanting space. RXR declined further comment, and Bank of America and Carlyle Group did not immediately respond to requests for comment.
The valuation has fallen sharply from earlier marks. If the 2022 loan had been sized at a conservative 60 percent loan-to-value, the property would have been valued at about $433 million, and the new figure is more than half lower. RXR had also valued the building at a reported $500 million when it bought the 99-year ground lease in 2013, and invested $150 million in renovations in 2017. WeWork's termination of its roughly 300,000-square-foot lease in its 2023 bankruptcy restructuring and the collapse of a 2019 Airbnb conversion plan add to the building's leasing history.
Farallon, founded in 1986 by Tom Steyer, has a real estate business that raised a $650 million fourth U.S. opportunistic fund in 2023. Its property arm is run by Avner Husen, formerly a manager at Blackstone's BREIT. The firm teamed with Fetner Properties and MCB Real Estate to buy the 463-unit 240 Willoughby Street in Fort Greene for $210 million in July, and bought 85 East End Avenue, a 74-unit luxury rental, for $75 million last year.
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