A Class A office building that touted high-end tenants like Ralph Lauren has been turned over to special maintenance.
The borrower behind 650 Madison Avenue, a group that includes Vornado Realty Trust, has not met its payment obligations, according to a note from Morningstar Credit. The property was recently valued 21 percent less than in 2019.
The Plaza District Building, located between East 59th and 60th Streets, is a 28-story office and retail building totaling 595,000 square feet. It was purchased in 2013 by a group of investors — including Vornado, Oxford Properties Group and the Ontario Municipal Employees Retirement System — for about $1.3 billion.
The owners secured a $214 million refinancing for the property in 2019. But since then, both sales and occupancy have taken a hit. When the loan was granted, the occupancy rate was 97 percent. But Ralph Lauren, which once rented more than 40 percent of the space in the building, has downsized by 39 percent and now pays about 30 percent less in rent. According to Morningstar, the occupancy rate fell to 57 percent in 2024, but is now back at 74 percent.
In addition to Ralph Lauren, current office tenants include Lakewood Capital, according to Vornado’s website, with retail space occupied by Celine, Moncler, Balmain, Cremieux, Tod’s and others.
Revenue last year was $69.9 million, compared to $87.3 million in 2019.
The most recent appraisal also saw the property drop in value. Once estimated to be worth $1.21 billion, 650 Madison was valued at $950 million.
The loan was transferred to a special service after the borrower failed to finance a “waterfall deficit,” a type of investment distribution. According to information from Morningstar, the borrower has formally requested the transfer.
The lender said it is in discussions with the borrower and is evaluating all available legal and resolution options, including loan sale and foreclosure. A pre-negotiation agreement has already been signed.
Vornado did not respond to a request for comment.
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