The New York Times weathered some powerful storms in media over the last 20 years to transform itself into a digital publication with more than 11 million subscribers and $300 million in annual earnings.
Unfortunately, success hasn’t carried over to its 1.5 million square-foot headquarters tower at 620 Eighth Ave. – at least the part it doesn’t occupy.
In the past year several tenants have left the building across from the Port Authority Bus Terminal, and in September the law firm Covington & Burling plans to leave 200,000 square feet for new space at Hudson Yards. Now, a credit-rating agency is warning that part of the building that isn’t owned by the news organization may have difficulty refinancing when nearly $900 million of debts come due in December.
Fitch Ratings downgraded its outlook for the 52-story tower to “negative,” citing concerns of the “refinanceability” of its $635 million mortgage. The building also carries a $120 million junior mortgage and $115 million mezzanine loan. Fitch said the 620 Eighth generates only 66% of the cash needed to service its “substantial” debt.” The loans have been extended five times since 2020 and no further extensions are available, Fitch said.
620 Eighth was developed by the Times at a cost of $1 billion in 2007. Two years later the publisher sold part of the building for $225 million and leased the space. It bought back the lower half of the tower in 2019 for $245 million, according to a regulatory filing. The publisher owns space up to the 27th floor and subleases about 300,000 square feet, according to its most recent annual report, which adds the company carries no debt.
Fitch’s concerns center on floors 29 through 51, a 740,000 square-foot slug of office space owned by Brookfield Asset Management. Brookfield declined to comment.
Fitch noted that Brookfield has been able to fill space that’s been vacated by tenants including law firms Goodwin Proctor, Osler Hoskin & Harcourt and asset manager ClearBridge Investments. Much of that space was lapped up by software company Datadog. But Covington & Burling, a global law firm which leases 26% of the Brookfield-owned space, would leave a big hole to fill.
The Times building sits on land leased from the city, which granted the publisher a substantial discount on property taxes in exchange for developing the site. 620 Eighth paid about $20 million in property taxes in 2022, according to The City, or $10 million less than it would have owed without the discount, known as a payment in lieu of taxes or PILOT. Fitch noted that Brookfield has the right to buy the ground lease in 2032 for just $10, though if it did so property taxes would increase to market rate.
