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New York-based property developer RXR, led by CEO Scott Rechler, is launching a $1 billion fund in partnership with Ares Management to invest in distressed office buildings in the city. The move signals a potential shift in the commercial real estate crisis, with a focus on acquiring underperforming office properties. RXR and Ares plan to target a segment of office buildings that may require fresh capital or debt restructuring due to changing market dynamics. The partners aim to identify opportunities in the middle of the market, focusing on class-A properties that are often overlooked by lenders and investors. The fund has been seeded with $500 million, with plans to raise an additional $500 million. The move comes as the office sector experiences a reset, acknowledging the challenges posed by remote work and changing demand for office space.

Original article posted on January 20, 2024