T
he debt backing Worldwide Plaza, a 2 million-square-foot office complex at 825 Eighth Avenue, is on shaky ground as its massive maturity looms in 2027. The building's owners, RXR and SL Green, have seen their $940 million senior mortgage transferred to special servicing due to delinquent payments and operating deficits. They're now trying to negotiate a loan modification with lenders.

    The complex has been struggling since law firm Cravath, Swaine & Moore let its lease expire this year, leaving a 30% vacancy in the building. The other anchor tenant, Nomura Holdings, is also downsizing from 700,000 square feet to 500,000. This, combined with $425 million worth of junior loans, has put the property's value under pressure.

    The implied value for Worldwide Plaza was cut by nearly a third last year, from $1.7 billion in 2017 to $1.2 billion. SL Green and RXR acquired a 49.9% interest in the property at a $1.7 billion valuation seven years ago, while New York REIT owns the majority stake and is liquidating its assets. The landlords are trying to use their leverage to negotiate with lenders, knowing that foreclosing on the property would be unattractive for creditors due to previous losses on similar buildings.