Aby Rosen was New York real estate royalty. Is his office empire crumbling?

By the time property developer Aby Rosen bought New York’s Seagram Building in 2000, both the mid-century Midtown tower and its namesake Canadian distiller were past their prime.

But the building was the making of Rosen’s real estate empire. Together with his longtime business partner Michael Fuchs, their company RFR Holding and a vast collection of modern art, Rosen renovated, rebranded and remarketed unloved landmarks at higher rents.

“Rosen brought an art collector’s eye to real estate,” said Bob Knakal, who heads brokerage firm BK Real Estate Advisors and has worked on deals for Rosen in the past. “He looked at buildings and saw things that other people missed.”

The 375 Park Avenue tower, never officially named the Seagram Building, was completed in 1958 as the first Manhattan skyscraper with floor to ceiling windows. At the start of its fifth decade, it was draughty and energy inefficient with a fire-prone electrical system and leaky fountains in its plaza. The building’s famed Four Seasons restaurant was in its twilight.

The German émigré bought the property for $375mn and spent tens of millions more on upgrades. Over the next decade, it was rarely anything other than full. By 2013, it was a $1.6bn testament to Rosen’s acuity at wringing fortunes from faded landmarks as well as his spot in the top tier of New York developers.

Now it only produces about half the income it did before the pandemic, and Moody’s Analytics last month included it on a list of properties that may be difficult to refinance. RFR refinanced a $400mn debt tied to the building in December, but still owes $750mn on a 2013-vintage loan.

Since 1991, Rosen has bought more than 50 buildings across Manhattan — including a half stake in the Chrysler Building. He has sold a few along the way, as well as diversified by buying buildings in Seattle, Tel Aviv and elsewhere.

But the flashy purchases of a man with an equally showy social life may now be starting to catch up with him.

Billions that Rosen has borrowed on the Seagram Building and other properties are either coming due in the next year or already have, at a time when higher interest rates and the post-Covid realities of office have cut commercial real estate valuations and made refinancing more difficult.

RFR said the Seagram Building was “fully leased with an investment grade tenancy” and that operating profits are set to more than double this year.

Even so, similar stress is being replicated across the RFR portfolio.

In 2018, Rosen told the Financial Times that the value of RFR’s portfolio had climbed to $14bn. Since then, the global real estate market has not been kind.

He has already been forced out of some of his marquee properties, including the Lever House, and a high profile office-to-condo project in Midtown Manhattan.

Last week, he had $470mn in debt come due on 285 Madison, a 26-storey building near New York’s Grand Central Station worth $610mn when he took out the loans in 2018. In 2022 it was valued at $60mn less than the debt.

RFR is far from the only New York developer feeling the pain from a post-Covid real estate downturn. Still, the developer and his partners have to reckon with at least $2.5bn in debt either coming due in the next year or already past due, a FT analysis of publicly available loan data shows.

The analysis found 16 loans connected to more than 20 properties that RFR owns, by itself or with partners. Collectively, those buildings generated just over $26mn last year after interest payments, nearly three-quarters less than the $97mn they were expected to when RFR and its partners took out the debt.

Twelve of the loans are in some state of distress, whether flagged by mortgage servicers as at risk of default, delinquent or still outstanding despite the maturity date having passed.

Four of the buildings are not bringing in enough rent to cover mortgage expenses. Another two are either empty or about to be: one of which being a Brooklyn office building that was fully occupied by WeWork before the bankrupt co-working company broke its lease last year.

Lawsuits and mortgage filings point to a growing pile of unpaid bills.

Earlier this month, a former top executive of Rosen’s RFR Holding sued Rosen and Fuchs for $20mn, alleging they had missed two deadlines this year on payments tied to a 2019 exit package.

A Blackstone venture is separately pursuing the developers for nearly $50mn, one of a number of outstanding loans that the private equity group and its partners bought from the failed bank Signature.

RFR has also missed mortgage payments and a property tax bill totalling just over $9mn on 522 Fifth Avenue….