Chrysler Building ownership is in limbo
The owners of the Chrysler Building are fighting to hold onto the iconic Art-Deco skyscraper after falling behind on more than $21 million in rent. RFR, led by Aby Rosen, on Monday, made a legal filing accusing landlord Cooper Union, which owns the land under the Chrysler, of driving away tenants with its response to a campus protest last October, which influenced several tenants to cancel or terminate their leases, as reported by Crain’s New York. But data from CoStar shows that the tower’s occupancy rose to 85.7 percent as of September 30, up from 82.8 percent in 2023.
When RFR Holdings teamed up with Signa Holding, led by René Benko, to buy the Chrysler in 2019 for $151 million, they entered into a ground lease, giving them control of the skyscraper but requiring them to pay rent to Cooper Union, the owners of the land beneath it, according to the New York Times.
Cooper Union, which uses the rent from the building to subsidize student tuition, on September 27 revealed it was terminating the ground lease and taking control of the building, alleging that RFR was months behind in rent payments.
RFR responded with a lawsuit to halt the takeover, initially claiming that Cooper Union failed to properly file the associated paperwork, which also contained errors, according to Curbed. In an amended complaint, RFR has now added allegations that Chrysler tenants are leaving due to “gross mismanagement” and preventing them from making rent payments.
The “certain tenants,” who RFR has yet to name, were reportedly upset about how Cooper Union chose to handle campus protests over Israel and Palestine, and many canceled, terminated, or refused lease extensions in the Chrysler because of it.
Despite some Cooper Union alumni threatening to cut donations to the university, there was no further public discussion about divesting from Cooper Union’s real-estate holdings.
However, RFR continues to claim that the school’s handling of the protest “profoundly disturbed” the real-estate community, which associates Cooper Union with the Chrysler, leading to “tens of thousands” being left vacant, as reported by Crain’s.
The incident described in the suit took place on October 25, 2024, in which students and faculty of Cooper Union walked out to protest Israel’s military response to the October 7 attacks by Hamas.
RFR claims that a mob chased Jewish students and broke into the college library while trying to smash doors and windows, while the school’s president instructed police to stand down.
On September 27, Cooper Union sent a termination letter saying it was taking control of the building and announced it would hire real estate firm Cushman & Wakefield to manage it, according to the Times.
“None of Mr. Rosen’s actions are surprising. The bottom line is that Mr. Rosen, a reported billionaire developer, refuses to pay the rent that is indisputably owed to Cooper Union,” John Ruth, vice president of finance at Cooper Union, told Crain’s.
“The shameful and baseless allegations in his latest court filings are obvious attempts to obfuscate the fact that he refuses to pay his bills.”
Constructed in 1930, the Chrysler Building is a historic icon of the city’s skyline, but it has since fallen into disrepair. Residents of the 77-story, one-million-square-foot tower report issues such as rodent infestations, cracked ceilings, broken elevators, dirty drinking water, and vacant retail storefronts in the basement.
RFR’s fight to keep ownership of the tower comes during a tough year for the firm. Money lenders and city agencies sued RFR for missed loan and tax payments on their properties at 17 State Street, 522 Fifth Avenue, and 90 Fifth Avenue.
A highlight of RFR’s portfolio, the Seagram Building, located at 375 Park Avenue in Midtown, is almost completely occupied yet still has $1 billion in mortgage and mezzanine debt that needs to be refinanced in 2025, according to Crain’s.
RFR purchased the building for $151 million in March 2019, marking a huge loss for the previous majority owner Abu Dhabi Investment Council, which paid $800 million in 2008 for a 90 percent stake in the tower. At the time, Rosen told Bloomberg that he would consider converting the tower into a hotel.
In 2020, Rosen presented a proposal to the Landmarks Preservation Commission to create an observation deck on the skyscraper’s 61st and 62nd floors.
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