A prominent office and retail property in Manhattan’s Plaza District, 650 Madison Avenue, has been transferred to special servicing after its ownership group failed to meet payment obligations. The building is owned by a group including Vornado Realty Trust, Oxford Properties Group, and the Ontario Municipal Employees Retirement System.
According to a note from Morningstar Credit, the property was recently appraised at $950 million, a 21 percent decrease from its 2019 valuation of $1.21 billion. The 28-story building, which spans 595,000 square feet and sits between East 59th and 60th Streets, was acquired by its current owners in 2013 for approximately $1.3 billion.
The owners refinanced the property in 2019 with a $214 million loan. At that time, occupancy stood at 97 percent. However, since then both revenue and occupancy have declined. Ralph Lauren, once occupying more than 40 percent of the building’s space, reduced its footprint by 39 percent and is now paying about 30 percent less in rent. Occupancy dropped to 57 percent in 2024 but has since rebounded to 74 percent.
Other office tenants include Lakewood Capital, while retail tenants listed on Vornado’s website include Celine, Moncler, Balmain, Cremieux, Tod’s and others. Revenue for the building fell from $87.3 million in 2019 to $69.9 million last year.
The loan transfer to special servicing followed the borrower’s failure to fund a “waterfall shortfall,” which refers to a type of investment distribution. Morningstar Credit reported that the borrower formally requested this transfer.
The lender stated that it is currently “in discussions with the borrower and evaluating all available legal and resolution options, including a loan sale and foreclosure.” A pre-negotiation agreement has already been signed between parties involved.
Vornado Realty Trust did not respond to requests for comment.
