RXR JV Lands $575M for Manhattan Conversion
Construction is slated to kick off this year.
RXR Realty, Apollo Global Management and SL Green have secured two separate notes for the partial conversion of the 1.1 million-square-foot 5 Times Square office tower into a 1,250-unit community, including 313 affordable units, Bisnow first reported.
The debt includes a $561 million loan and a $13.6 million security instrument, both issued by Corebridge Institutional Investments. RXR, which previously ground-leased the property, also paid $8 million for the land.
The trio received approval for the Gensler-designed adaptive reuse project last month, which is slated to transform about 918,000 square feet of office space into 1,050 studios and 200 one-bedroom units. Roughly 37,000 square feet of retail space will be preserved, while streaming company Roku will occupy the remaining workplace space.
Benefitting from the Office Conversion Accelerator program, which aims to expedite the development process, the project’s construction is on track to kick off by year’s end, and phase one’s completion is set for 2027.
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The ownership will also receive a tax abatement under the 467-m initiative in exchange for building the affordable units, which will be reserved for future residents earning up to 80 percent of area median income.
From Ernst & Young’s headquarters to multifamily
The tower debuted in 2002 and served as the headquarters of Ernst & Young until 2022, when the financial advisor vacated the premises. That same year, RXR and SLG took out a $1.3 billion loan for the property’s renovation from Morgan Stanley, Apollo and Corebridge, formerly American International Group.
The tower’s facelift improved its lobby and produced a new amenity center—which future residents may also access—including a gym and lounge, among other features. However, by 2024, the property was 80 percent vacant, and the adaptive reuse idea was first proposed.
To repurpose the building, RXR and SLG recapitalized the asset last year and modified its $1.3 billion debt structure and purpose, utilizing the proceeds for the conversion development instead of tenant improvements and office buildouts.
Apollo converted its mezzanine debt into equity, joining the ownership team, while Corebridge maintained its senior lender position, as opposed to Morgan Stanley, which chose not to. Additionally, the leadership pledged to invest another $200 million during the repositioning process.
Office-to-resi conversions ramp up in Manhattan
This 37-story high-rise is the first Times Square property to undergo residential conversion, but not the sole Manhattan office building destined for adaptive reuse. One of the biggest conversion projects targets Pfizer’s former headquarters, transforming it into a 1,602-unit community. The owners landed a $720 million loan last month.
Metro New York City’s office-to-residential pipeline comprised 8,310 units underway at the start of 2025, according to a RentCafe report. With a 59 percent increase in the under-construction unit count year-over-year, the market took the spotlight, overthrowing Washington, D.C.
