Helmsley Building Faces Foreclosure After Defaulting on $670M Loan

RXR’s Helmsley Building is heading to foreclosure after years of financial issues at the landmarked property at 230 Park Avenue.

After defaulting on its $670 million mortgage on the building last year, RXR also carries a $125 million mezzanine debt owned by lenders Morgan Stanley (MS) and Brookfield (BN), according to Crain’s New York Business, which first reported the news.

The lenders filed foreclosure action in New York State Supreme Court on Tuesday, effectively halting RXR’s potential plans to save the 1.4 million-square-foot property by converting it into residential units.

While those lenders are now in a position to assume control of the building, “RXR continues to have constructive conversations with the lenders,” a spokesperson for RXR said in a statement to Commercial Observer.

Spokespeople for Morgan Stanley and Brookfield did not immediately respond to requests for comment.

After buying the building near Grand Central Terminal in 2015 for $1.2 billion and pouring $100 million into renovations, the Helmsley ran into trouble last month when its value plummeted by 40 percent, as CO previously reported.

The Helmsley was valued at $770 million in November, a steep drop from the $1.3 billion value just three years prior, CO reported.

Built in 1929, the 34-story office tower was developed by the New York Central Railroad and was known as the New York Central building until 1977, when former owner Harry Helmsley named the building after himself. Helmsley died in 1997.

Foreclosure at the Helmsley is the latest distress for RXR, which is also facing foreclosure at 340 Madison Avenue by lender MassMutual after defaulting on a $315 million loan.

Isabelle Durso can be reached at idurso@commercialobserver.com.