The Helmsley Building Sees 40% Slump in Value Over Last Three Years
By Amanda Schiavo November 19, 2024 1:27 pm
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It has been a rough three years for RXR’s Helmsley Building as a new appraisal of the famed 1.4 million-square-foot tower shows its value has declined 40 percent in that time, according to Morningstar.
The Helmsley Building, at 230 Park Avenue, was recently valued at $770 million, a significant drop from the $1.3 billion value only three years prior, the Morningstar report found.
In July, RXR began exploring converting portions of 230 Park Avenue into different uses, including residential, following the default of a $670 million loan, Commercial Observer previously reported. The single-borrower commercial mortgage-backed securities loan has been in special service for over a year after a drop in cash flow at the building, according to Morningstar. SL Green Realty is the special server.
“To that end, 2023’s [net cash flow] was 21 percent below the underwritten level and is expected to decrease further as the servicer notes that occupancy is expected to fall from 81.5 percent currently to 68.1 percent by April 2025, based on tenants’ known plans to vacate,” Morningstar noted in its Nov. 18 newsletter.
This isn’t the first time RXR has faced some distress in its portfolio. In May, lender MassMutual filed a foreclosure notice against RXR and its partners following a loan default for 340 Madison Avenue, Commercial Observer previously reported. A year prior, RXR defaulted on a $240 million loan for its 61 Broadway office tower.
A spokesperson for RXR declined to comment beyond noting that “RXR continues to have constructive conversations with the lender.” Crain’s New York Business first reported the dip in valuation.
The 34-story office tower was developed in 1929 by the New York Central Railroad and was known as the New York Central building until 1977, when real estate magnate Harry Helmsley acquired the building, renaming it for himself. Helmsley died in 1997.
RXR purchased 230 Park Avenue in 2015 for $1.2 billion, the Wall Street Journal reported at the time.
Amanda Schiavo can be reached at aschiavo@commercialobserver.com.
