Recaps Were a Big Trend in Commercial Real Estate in 2024

As a higher-for-longer interest rate environment permeated the past year, private equity forces played a greater role in aiding property owners in upgrading buildings and stabilizing assets.

The biggest commercial real estate landlords — including several on our Power 100 list — brought on joint equity partners for a number of recapitalizations, particularly in the office sector, which got battered at the height of the COVID-19 pandemic but has begun to recover. 

One of the bigger recaps took shape in the form of a $1.3 billion loan modification for 5 Times Square and a future $200 million equity infusion as part of a deal that RXR, SL Green Realty and Apollo Global Management closed in October 2024. Apollo, which was previously a mezzanine lender for the office property, converted its position into equity as part of the recap to join the ownership group as it explores a possible conversion of the 39-story office tower.

RXR led much of the recap charge as it sought to position its office portfolio to withstand a prolonged higher rate environment.

In January 2025, Sagehall joined RXR as an equity partner to help facilitate $70 million of fresh capital for its 475,000-square-foot office building at 530 Fifth Avenue. The deal also involved the joint venture sealing a $110 million loan facility from ING Capital as part of a broader repositioning plan for the property, which was 85 percent occupied at the time.

RXR partnered, too, with Hudson Bay Capital in October to recapitalize 620 Avenue of the Americas, a 700,000-square-foot office and retail property that had faced leasing challenges when its anchor tenants, WeWork and Bed Bath & Beyond, each filed for bankruptcy in 2023. The transaction, which involved inking a $320 million loan from a consortium of lenders, made Hudson Bay a 50-50 partner in the property. This was after RXR closed 300,000 square feet of leases during a two-year period prior to the recap to get the building up to 100 percent leased.

It wasn’t just the office sector that was active with recap activity over the past year, though. 

In January 2025, Harbor Group International formed a joint venture with The Garrett Companies and Telis Group to complete a $630.5 million recapitalization of a 2,192-unit multifamily portfolio involving apartment projects in various stages of development across Colorado, Minnesota, Indiana and Arizona. Harbor Group had worked closely with Garrett prior to the deal through the acquisition of two of its Denver properties in early 2024, paving the way for one of many large-scale recaps late last year and continuing into 2025.

Andrew Coen can be reached at acoen@commercialobserver.com.