A trophy Midtown office tower has become the marquee distress story of New York’s 2026 real estate market — and a three-way brawl among some of the industry’s biggest names. Worldwide Plaza, the 1.8-million-square-foot complex at 825 Eighth Avenue owned by SL Green and RXR, is the target of two competing foreclosures after its owners defaulted on the debt.

On one side is Gary Barnett’s Extell Development, which quietly bought up the tower’s mezzanine debt in the fall of 2025 and moved to foreclose under the Uniform Commercial Code. On the other are the senior lenders behind a roughly $940 million securitized loan — Goldman Sachs, Deutsche Bank and the CMBS trustee — who filed their own foreclosure suit in late February 2026, per The Real Deal and Bisnow.

How a trophy went sour

For years Worldwide Plaza was a model “safe” office asset, anchored by the white-shoe law firm Cravath, Swaine & Moore. That changed when Cravath decamped — vacating roughly 617,000 square feet in 2024 as part of a relocation — and left the 49-story tower somewhere between 37% and 40% empty.

The math collapsed quickly. The roughly $940 million senior CMBS loan, originated in 2017 for the building’s acquisition, entered special servicing in September 2024 after the owners missed payments. An August 2025 appraisal cut the building’s value by about 80% — from roughly $1.7 billion to about $345 million — wiping out hundreds of millions of dollars in investor value and leaving the senior debt itself underwater. In December 2025, court filings say, SL Green and RXR failed to cover a $2.9 million interest payment and came up short on the property’s tax bill.

Barnett’s play

Extell’s Barnett saw an opening. Rather than wait for the slow grind of a mortgage foreclosure, he acquired the majority of the building’s mezzanine debt — junior loans secured by the ownership interests in the entity that holds the tower — and pushed a UCC foreclosure auction, a faster mechanism that can transfer control of a property in weeks.

SL Green and RXR sued to stop him, calling the auction a “sham” engineered to hand the building to Extell. They lost the first round: on January 28, 2026, New York County Supreme Court Justice Andrea Masley denied their request for a preliminary injunction, writing that contracts must generally be enforced “especially when negotiated by ‘sophisticated, counseled businesspeople,’” even after market conditions sour. The owners appealed, delaying the auction.

The senior lenders move

With the mezzanine fight in appeals, the senior lenders made their own move. In late February 2026, Goldman Sachs, Deutsche Bank and the CMBS trustee filed foreclosure suits over the $940 million loan — a competing path to seize the tower that, if successful, would leapfrog the junior creditors. SL Green publicly said it attributes “little to no value” to the asset under current conditions but signaled it intended to retain control, claiming it had a plan and the capital to revitalize the building.

Why it matters

Worldwide Plaza is not a one-off. It has become the highest-profile illustration of the distress working through Manhattan’s older office stock as anchor tenants consolidate into newer towers and lenders mark down loans made in a cheaper-money era. Other names have surfaced alongside it: a nonperforming note marketed on 61 Broadway, a CMBS default at 1407 Broadway, and a string of note sales and special-servicing transfers across the borough. Industry watchers have warned that the cycle is not over.

For now, the fate of a 1.8-million-square-foot Midtown landmark hangs on a litigation calendar — a measure of how much a half-empty office tower can complicate even the most sophisticated balance sheets.

Verification

Frequently Asked Questions

Who owns Worldwide Plaza and what is the dispute?
SL Green (led by Marc Holliday) and RXR (led by Scott Rechler) own the 49-story tower at 825 Eighth Avenue. They defaulted on its debt. Two separate creditor groups are now moving to seize it: the senior CMBS lenders on a roughly $940 million loan, and Extell's Gary Barnett, who bought up the building's mezzanine debt and launched a UCC foreclosure auction.
Why did the building get into trouble?
Its anchor tenant, the law firm Cravath, Swaine & Moore, vacated about 617,000 square feet in 2024, leaving the tower roughly 37%–40% empty. With Midtown office demand soft and rates high, the income no longer supported the debt. An August 2025 appraisal slashed the value by about 80%, from roughly $1.7 billion to about $345 million.
What is a UCC (mezzanine) foreclosure?
Mezzanine debt is secured not by the building itself but by the ownership interests in the entity that holds it, so it forecloses under the Uniform Commercial Code rather than through a traditional mortgage foreclosure — a faster process. Extell acquired the mezzanine debt and used it to try to take control ahead of the senior lenders.
What is the latest status?
In late January 2026 a judge denied SL Green and RXR's bid to block Extell's auction; the owners appealed. In February 2026 the senior CMBS lenders filed their own foreclosure suit over the $940 million loan. The competing claims remained in litigation as of early March 2026.