RXR, SL Green, Apollo Converting 5 Times Square Into 942 Resi Units

Two real estate heavyweights and an investment colossus have a bold pitch for New York City: Make your home in Times Square.

After months of talks, Apollo Global Management, in partnership with RXR and SL Green, filed plans to convert the 39-story office building at 5 Times Square into a mixed-use building with 942 units, PincusCo reported.

The team tapped Gensler, a go-to in the conversion game, as their architect. None of the firms immediately returned to requests for comment.

The conversion will be among the biggest in New York City, topped by a couple of Metro Loft projects by unit count. Nathan Berman’s firm is churning 1,500 units out of the former Pfizer headquarters in Midtown East and 1,200 out of 25 Water Street in FiDi.

More novel is the project’s location. Midtown has seen more conversions move forward amid freefalling office values and a crucial tax break passed by Albany this year. (The Apollo team will reportedly tap the incentive, which requires one-quarter of units to be made affordable.)

But few developers have made the wager that tenants, even in one of the city’s most constrained rental markets, would want to live in the chaotic, tourist-flooded heart of New York City.

That may be why the 1.1 million square foot 5 Times Square is billed as a triptych — part resi, part retail and a part that will remain office space, Commercial Observer reported. The plans filed by Apollo show no updated use for floors 30-39.

Other developers working to convert large office buildings have pursued mixed-use in hopes of selling tenants on living near their offices.

In Chicago’s Central Loop, for example, the former BMO Harris Bank headquarters was remade into the Monroe Hotel and Residences with residential units, hotel rooms, a rooftop, a lounge and ground floor retail.

RXR and former owner David Werner recently injected $200 million into renovating 5 Times Square to include a restaurant, spa and golf simulator. The conversion will add coworking space, residential amenity space and a party room, according to plans filed with the city detail.

The split use also makes sense for buildings that have retained major tenants with long-term leases. 5 Times Square is 80 percent vacant but did manage to sign streaming tech firm Roku in early 2022 for 240,000 square feet. The company will stay in the building, Commercial Observer reported.

In preparation for the project, the Apollo team recapitalized the building’s $1.3 billion debt in late October.

Morgan Stanley, AIG and Apollo had doled out the financing in 2022. Apollo converted its position as the mezzanine lender into equity. AIG, which is now Corebridge, stayed in the deal, and Morgan Stanley did not, CO reported, citing sources familiar with the financing.

The recap includes a future $200 million equity infusion that the team will tap to fund the conversion.