BGO Surrenders Midtown East Office Tower To Avoid Foreclosure

BentallGreenOak handed back the keys to a Midtown East office tower through a deed-in-lieu of foreclosure.

Lender New York Life Real Estate Investors took over the 500,000-square-foot Class A building at 757 Third Avenue, according to property records. The transfer ends BGO’s nearly decade-long ownership of the 1960s-era tower, which appears to have faced occupancy challenges amid a sluggish post-pandemic leasing environment.

New York Life estimated the property was valued at about $150 million at the time of the transfer, PincusCo reported, citing industry sources. That’s less than half the Canadian investment firm paid in 2015, when it bought the property from Aby Rosen’s RFR Holding for $360 million. New York Life provided a $205 million loan for the purchase that carried a 15-year term. At the time, the building was 95 percent leased.

In 2017, Bentall Kennedy tried to sell a 49 percent stake in 757 Third Avenue and two San Francisco properties in hopes to raise $1 billion. But that apparently never happened. Bentall Kennedy merged with GreenOak Real Estate in 2023 to become BentallGreenOak.

The 26-story building two blocks west of the United Nations counts Wolfe Research, Berkley Insurance and Grant Thornton among its largest tenants. Berkley renewed its 60,000-square-foot lease in 2022, but overall occupancy has remained under pressure as tenants across Midtown East shedded space or relocated to newer buildings after the pandemic. Occupancy at the building has fallen to about 74 percent, according to CoStar data.

Last year, reinsurance broker BMS Group expanded its footprint to 13,000 square feet and software company Endava took 7,000 square feet in the building, according to Commercial Observer, which first reported news of the deed-in-lieu. The Consulate General of Portugal also announced it would relocate to a 7,000-square-foot prebuilt space on the 17th floor.

The handover adds to a growing list of older Midtown assets reverting to lenders or being sold at a discount as debt maturities collide with higher interest rates and diminished office values.

BGO and New York Life did not immediately respond to requests for comment.