The senior lenders behind Worldwide Plaza filed a foreclosure lawsuit, adding another layer to the high-stakes legal fight over the Midtown office tower.
Goldman Sachs, Deutsche Bank and a trustee for the CMBS bondholders allege that owners SL Green and RXR defaulted on $940 million in senior debt tied to 825 Eighth Avenue, according to a complaint filed on Feb. 21 in New York Supreme Court.
The lenders are asking the court to appoint a temporary receiver to manage the 1.8 million-square-foot property and to authorize a foreclosure sale, according to the lawsuit, first reported by PincusCo.
The lenders are also demanding that the landlords cover any chunk of the $940 million debt left unpaid after the property sale — debt that SL Green and RXR guaranteed, per the lawsuit. SL Green in a statement characterized the filing as part of an ongoing negotiation.
“This administrative filing is a procedural step and all parties are separately actively engaged and working collaboratively toward a resolution,” said a spokesperson for SL Green.
The foreclosure suit is the latest legal dispute surrounding Worldwide Plaza.
In January, the owners tried to block a UCC foreclosure sale tied to the property. But a judge rejected their attempt, clearing the way for the mezzanine lender, Gary Barnett’s Extell Development, to move forward with a foreclosure auction. SL Green and RXR appealed the decision and Extell has until March 4 to respond.
It’s unclear what the latest lawsuit means for the UCC sale, and it may come down to timing.
A mezzanine lender can foreclose on the borrower’s equity interests — not the real estate itself — through a UCC sale, a process that is typically faster and does not require a judicial proceeding. A senior lender, by contrast, must foreclose on the property through a mortgage foreclosure, which in New York runs through the courts and can take significantly longer.
Representatives for RXR and Extell, along with a lawyer for the senior lenders, did not immediately respond to requests for comment.
Goldman Sachs and Deutsche Bank provided a 10-year, fixed-rate $940 million loan on the property in 2017 that was split into $705 million in CMBS debt and a $235 million companion loan, per the suit. The debt went to special servicing in September 2024 after law firm Cravath, Swaine & Moore vacated 617,000 square feet, leaving Worldwide Plaza about 40 percent vacant.
The landlords defaulted on both senior and mezzanine debt in July, according to public filings. After issuing several default notices, the lenders accelerated the debt in January, making the full outstanding balance of $960 million immediately due, per the suit. Copies of the default and acceleration notices were sent to attorneys for Extell, per the suit. Under the intercreditor agreement, the mezzanine lender had 10 days to cure the default.
“Our position on Worldwide Plaza has long been clear,” the SL Green spokesperson said. “While we moved the asset into our alternative strategy portfolio over two years ago given that we attribute little to no value to the asset, we have a plan to revitalize the building and the capital to execute it.”
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