RXR, through its Office Recovery Fund, and Hudson Bay Capital have partnered to acquire and recapitalize 620 Avenue of the Americas, a historic 500,000 square-foot office and retail building in Manhattan’s Chelsea neighborhood. The Class-A mixed-use building’s soaring ceiling heights, efficient 100,000+ sf floorplates, acclaimed architectural elements, as well as its prime location, make it a sought-after space for a wide variety of retail and office tenants.
The RXR and Hudson Bay Capital joint venture secured a five-year, $320 million loan facility as part of the transaction.
Historically, the property benefitted from leasing activity that left the building fully occupied with a high-quality tenant base. As a result of macro changes in how people work and shop and a higher interest rate regime, 620 Avenue of Americas faced challenges. The bankruptcies of two prominent tenants – WeWork and former retail giant, Bed, Bath, and Beyond – created a vacancy in over 50% of the building.
Over the past two years, RXR executed over 300,000 square feet of new and renewal leases to different office tenants, including Palantir and Current. The recent renewal of Cole Haan for over ten years and the expansion of 21,000 square feet by the long-time occupant, 32BJ labor union, brought the building’s office component to 100 percent occupancy.
RXR is also in active negotiations with multiple tenants who are competing to take over the remaining vacant retail space. Based on the strong leasing activity to date, this space could be fully leased within the next six months and bring the asset to 100 percent leased in both office and retail.
“This recapitalization, combined with overwhelming tenant demand both in the office and retail market, demonstrates that by applying capital and capabilities to the right asset with the right capital structure, iconic buildings like 620 Avenue of the Americas can thrive in a post-pandemic world,” said Scott Rechler, Chairman and CEO of RXR. “We have never wavered in our belief in New York City’s recovery, and this transaction is proof of the city’s continued resurgence.”
“Given the dislocation in real estate markets, we believe high-quality assets paired with creative capital solutions can drive attractive risk-adjusted returns,” said Sander Gerber, CEO and CIO of Hudson Bay Capital.
The building’s prime location and physical attributes, and overwhelming tenant demand demonstrate that while commercial real estate is undergoing a transformational moment, select buildings with the right attributes can thrive in a post-COVID world.
About RXR
RXR is an innovative investor, developer and place-maker committed to applying a customer and community-centered approach to building properties, services, and products that create enduring value for all stakeholders. Headquartered in New York with a national platform strategy, RXR is a 450+ person, vertically integrated operating and development company with expertise in a wide array of value creation activities, including ground up real estate, infrastructure and industrial development, uncovering value in underperforming properties, repurposing well-located iconic properties, incorporating cutting edge technologies and value-added lending. The RXR platform manages 93 commercial real estate properties and investments with an aggregate gross asset value of approximately $18 billion, comprising approximately 30.5 million square feet of commercial properties, a multi-family residential portfolio of approximately 9,400 units under operation or development, and control of development rights for an additional approximately 3,000 multi-family and for sale units as of December 31, 2023. Gross asset value compiled by RXR in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.
About Hudson Bay Capital
Hudson Bay Capital Management is a global investment management firm with offices in Stamford, Greenwich, New York City, Miami, Boston, London and Dubai. Hudson Bay Capital’s team seeks to achieve outstanding performance by uncovering market inefficiencies and undervalued investment opportunities that are uncorrelated to each other and to market indices while maintaining a focus on risk management, portfolio construction and capital preservation.
