A 28-story office and retail property at 650 Madison Avenue, owned by a group including Vornado Realty Trust, has been moved to special servicing after the borrower failed to meet payment obligations. Morningstar Credit reported that the building, which once attracted high-profile tenants such as Ralph Lauren, was recently appraised at $950 million—21 percent less than its 2019 valuation of $1.21 billion.
The property is located in Manhattan’s Plaza District between East 59th and 60th Streets and encompasses 595,000 square feet. The current ownership group—Vornado Realty Trust, Oxford Properties Group, and the Ontario Municipal Employees Retirement System—acquired it in 2013 for approximately $1.3 billion. In 2019, they secured a $214 million refinancing deal.
Occupancy rates have fluctuated since then. While occupancy was at 97 percent when the loan was issued in 2019, it fell to 57 percent in 2024 before recovering to its present level of 74 percent. Ralph Lauren significantly reduced its footprint in the building by downsizing by nearly 40 percent and is now paying about one-third less in rent compared to previous years. Other current office tenants include Lakewood Capital; retailers such as Celine, Moncler, Balmain, Cremieux, and Tod’s also occupy space.
The building’s revenue has also declined. In 2023, revenue stood at $69.9 million compared to $87.3 million in 2019.
The transfer to special servicing occurred after the borrower failed to fund a “waterfall shortfall,” a type of investment distribution mechanism. According to information from the lender provided by Morningstar Credit, “The borrower formally requested the transfer.” The lender is currently in talks with the borrower and is “evaluating all available legal and resolution options, including a loan sale and foreclosure.” A pre-negotiation agreement has already been signed.
Vornado did not respond to requests for comment.
