RXR just had a big week. Well, actually, it had a ginormous Thursday.
The developer finally closed on 590 Madison Avenue, dropping $1.1B for the 42-story Class-A office tower. It brought in Paul Singer’s hedge fund, Elliott Investment Management, as an equity partner and financed the deal to the tune of $785M from Apollo Global Management.
The sale is the largest full-asset, non-user-driven acquisition in the city’s office market since March 2018, Scott Rechler’s firm boasted in a press release.
The same day, RXR announced the expansion of its partnership with Liberty Mutual Investments, teaming up with the life insurance giant to deploy as much as $1B in credit across the capital stack. The partnership plans to target multifamily properties nationwide.
LMI also led a $250M corporate bond financing for RXR, which manages investments with a gross asset value of $17.4B. The duo first linked in 2010 and have only grown closer since.
Thursday encapsulates RXR executing on an aggressive plan to grow in the years since the pandemic — a strategy that is old hat for Rechler.
RXR was formed after the 2006 sale of Reckson Associates Realty Corp. to SL Green. The deal, which came with a one-year noncompete agreement for Manhattan, was made “two weeks before the top of the real estate market on the commercial side of things,” Rechler told The New York Times in 2011.
That allowed RXR to sit back as values plummeted during the Global Financial Crisis, before springing into action. He started buying debt before making the major acquisitions of the Helmsley Building, 340 Madison Ave. and 1330 Sixth Ave. Five years after formation, RXR owned $4B worth of assets totaling 11M SF. By 2023, just over a decade later, RXR’s aggregate gross asset value was placed at $21B, comprising 26.5M SF of CRE and 7,100 residential units.
Like many NYC owners, it’s had to take its medicine, losing some assets like 340 Madison to lenders and fighting for control of others.
But there’s a lot more deals done this year hiding behind Thursday’s flashy announcements. RXR originated $1B of loans last year and has acquired 8M SF of office space over the past 18 months. Most of that has been “very much off-market and very structured,” RXR Chief Strategy Officer and Head of Equity Capital Markets, Scott Crowe, told me last month.
If history is any indication, Rechler isn’t slowing down anytime soon, and Thursday may have just set the stage for what could be another transformative chapter for RXR.
