RXR Takes 49% Stake in Ivanhoé Cambridge’s 1211 Avenue of the Americas

“Read all about it!” The News Corp. Building officially has a new co-owner. 

RXR has taken a 49 percent stake in Ivanhoé Cambridge’s building at 1211 Avenue of the Americas. 

Bloomberg first reported the news.

Newmark (NMRK)’s Adam Spies and Doug Harmon brought in RXR as a new partner to manage and operate the property with a brand-new business plan, representing RXR in the deal. Hines previously managed the building. 

That business plan includes an extensive repositioning of the building. RXR plans to invest a further $300 million into the 2 million-square-foot property between 47th and 48th streets in Midtown Manhattan, according to a release from the owners Wednesday evening. 

As a new partner, RXR’s investment is tantamount to 49 percent of the common equity and also 49 percent of the capital investment. The building is valued at $1.2 billion currently, sources told Commercial Observer. 

The makeover will include a new, multitenant lobby and an upgraded plaza, plus a new amenity center and conference rooms. 

“This transaction underscores our strong conviction in New York City’s office market and its unparalleled resiliency. While some had written off New York City and declared the office era over, we never wavered in our belief in our hometown,” Scott Rechler, chairman and CEO of RXR, said in the release. “By partnering with Ivanhoé Cambridge to transform this iconic tower into a workplace that meets the demands of today’s global companies, we’re demonstrating that well-located, high-quality office buildings can thrive in a post-pandemic world.”  

Rupert Murdoch’s Fox News and sister company News Corp. are anchor tenants in the building, occupying 55 percent of its space. The two made headlines, no pun intended, by renewing their combined 1.2 million square feet in leases in January 2023, CO reported. 

Other tenants include Disney, Wells Fargo and Dow Jones. Axis Insurance left the property for nearby 1166 Avenue of the Americas with a 40,240-square-foot lease signed two years ago, CO first reported at the time. 

Ropes & Gray is also exiting its 300,000-square-foot space at the property, the law firm announced  in November last year. While the exit creates a big hole, it also creates a “rare opportunity” to the tune of 600,000 square feet of contiguous space for a new tenant “in one of the most sought-after neighborhoods in New York City,” according to the release. Ropes & Gray is moving to another of RXR’s buildings at 1285 Avenue of the Americas. 

As a new owner, RXR will also be 49 percent responsible for 1211 Avenue of the Americas’ $1.04 billion commercial mortgage-backed securities (CMBS) loan that’s coming due this August — a significant chunk of change. Rechler told Bloomberg he will discuss the maturing debt with the building’s lenders. 

The mammoth CMBS loan, originated in 2015, was flagged by Fitch Ratings last year, with concerns around the 45-story tower’s refinanceability, outstanding debt and Fitch’s stressed debt service coverage ratio on the total debt — which was 0.97x at the time. 

Ivanhoé Cambridge, a subsidiary of CDPQ, acquired a 51 percent interest in 1211 Avenue of the Americas in 2013, acquiring the remaining 49 percent stake in 2016. 

“We are thrilled to welcome RXR as our partner and operator at 1211 Avenue of the Americas, a landmark property Ivanhoé Cambridge has owned for over a decade,” Rana Ghorayeb, executive vice president and head of real estate at Ivanhoé Cambridge, said in the release. “Through this partnership, we intend to leverage RXR’s expertise in New York’s real estate market and invest in transforming one of the city’s most iconic buildings. This initiative aligns with our strategy to redefine workplace offerings that cater to the evolving needs of top-tier tenants in the country’s most sought-after markets.”  

 Strategic Capital‘s Henry Winterstern was also an adviser to RXR in the deal. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com and Andrew Coen can be reached at acoen@commercialobserver.com