444 Madison Avenue’s $120M Defaulted Loan Hits the Market 

The $120 million non-performing loan on Westbrook Partners’ office building at 444 Madison Avenue is up for sale, Commercial Observer has learned. 

The loan is in default and the sale is therefore being directed by its lender, Wells Fargo. Sources close to the transaction said the debt is expected to trade at a slight discount, and will give the winning bidder a direct path to owning the property outright via deed-in-lieu of foreclosure. 

Newmark’s Adam Spies, Adam Doneger, Doug Harmon, Marcella Fasulo, Avery Silverstein and Brett Siegel are leading the sale, per an offering memorandum (OM) viewed by CO, with a winning bidder expected to be announced at the beginning of the new year. 

The 466,800-square-foot building occupies a full city block between East 49th and East 50th streets, was built in 1931 and renovated in 2010. Its 42 stories are currently 52 percent leased, with 236,000 square feet currently sitting vacant, giving a new owner an opportunity to increase the building’s net operating income from $3 million to $15 million if they fill that empty space, per the OM.

Prospective tenants would have some fashionable — and probably checked? — shoes to fill. 

The building once served as Burberry’s headquarters, with the British luxury fashion brand — known for its trademarked Burberry check — leasing 68,300 square feet on floors 13 through 16 between 2009 and 2022, the New York Times reported. Burberry also had its name displayed on three sides of the building’s 42nd floor, alongside the time and temperature — meaning a future tenant can inherit those same perks. As the Times reported, illuminated signs aren’t permitted on new buildings these days, but 444 Madison Avenue has the advantage of being grandfathered in. 

Plaza District office space has enjoyed a 6 percent increase in rents this year— the highest increase in nine years — and roughly 690,000 square feet of leasing activity over the past 12 months, according to Newmark data. 

There is an existing ground lease at 444 Madison Avenue, but one that can be fully extended out by 64 years to 2089, according to the OM. Further, the winning bidder will be able to participate in the restructuring of the ground lease, which Westbrook previously negotiated with the ground lease owner, the Kandel family.

Wells Fargo, Westbrook and Newmark declined to comment. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.