RXR Lands $475M Debt Package or 61 Broadway Conversion

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As hinted at several months ago, Scott Rechler is cooking up another office-to-residential conversion in Lower Manhattan.

RXR secured $475 million in total tax equity and construction debt for the 33-story, 796-unit conversion project at 61 Broadway in the Financial District, the Commercial Observer reported. The debt is split between $420 million in construction debt from Apollo Global Management and a $55 million tax equity investment from J.P. Morgan Chase.

A JLL Capital Markets team including Andrew Scandalios, Drew Isaacson and David Giancola arranged the financing.

RXR will pull on the 467m tax abatement program targeting office-to-residential conversions, which designates approximately 200 units for affordable housing.

The firm filed plans in December to convert part of 61 Broadway into housing, though the firm didn’t reveal the full scope of the plan at that time.

RXR ran into trouble at the 670,000-square-foot property several years ago. In December 2022, the firm went into default at the property when it stopped making payments on a loan, which it took out in 2019. The loan had a two-year initial term and three one-year extensions, reaching maturity default in May 2023.

Months later, JLL listed a $240 million nonperforming loan on the troubled Financial District office building for sale. RXR even agreed to hand the keys back through a deed in lieu of foreclosure if necessary, but that never materialized.

At that time, the office space was only 57 percent occupied. In 2019, flexible workspace provider Knotel leased 60,000 square feet across four floors, but filed for bankruptcy two years later.

Construction on the conversion is expected to begin in March with initial apartment deliveries slated for early 2028. RXR is teaming with One Investment Management on the redevelopment.

Elsewhere in Manhattan, RXR has another major conversion in the works at 5 Times Square, where it has partnered with SL Green and Apollo Global Management. Over the summer, the partners secured a $575 million financing package for the conversion, which will turn approximately 918,000 square feet of office space into up to 1,250 residential units with 25 percent designated as affordable.

— Holden Walter-Warner