Lender Files to Foreclose on RFR’s 17 State Street

RFR couldn’t escape 2024 without one more crisis, though this one might not end with Aby Rosen and Michael Fuchs’ firm losing an office building.

Lender Wilmington Trust and special servicer Rialto Capital Advisors filed a lawsuit against RFR this week pertaining to 17 State Street in the Financial District, Crain’s reported. The lawsuit comes after RFR allegedly went into default on a $180 million loan over the summer.

The plaintiffs allege RFR owes $183.5 million as of the beginning of November, when including interest and fees on the debt. Should RFR fail to pay up, the plaintiffs ask to foreclose upon the 42-story property, seizing it and turning around to sell it.

RFR has not responded to the lawsuit itself, but a spokesperson told the publication that the landlord is working with the special servicer through “procedural steps” and intends to hang on to the building.

That’s not dissimilar from the party line RFR gave over the summer, when the debt was transferred to special servicing. At the time, a spokesperson said the company would be refinancing the debt in the near future.

The property is generally financially sound. Occupancy percentage was in the mid-90s, as of mid-August, according to Morningstar. Cash flow as of the end of last year was 3.5 times greater than debt service.

But issues have persisted in the interim months. RFR allegedly hasn’t deposited sufficient rent money into a special account, as required under the loan terms. In July, for instance, RFR allegedly collected $3.4 million in rent, but only deposited $2.3 million into the account, the lawsuit states.

RFR also allegedly hasn’t cooperated with a request to audit the company’s books in regards to 17 State Street.

The drama unfolding at the 571,000-square-foot property is far from the only issue RFR is confronting as the year comes to a close. Last month, RFR defaulted on a $219 million senior loan at 285 Madison Avenue, months after defaulting on the property’s mezzanine debt; a spokesperson for the company said it would work with the special servicer of the debt.

RFR is also in the midst of a fight with Cooper Union at the Chrysler Building, where Rosen’s firm is battling a lease termination.

— Holden Walter-Warner