The Real Deal New York

Company partnering with Todd English claims Kushner lied about food hall space

OHM is seeking to get out of the lease; landlord plans to countersue
By Kathryn Brenzel | February 20, 2018 01:10PM

229 West 43rd Street, Todd English and Laurent Morali (Credit: Neoscape, and LinkedIn)

The company partnering with Todd English to create a food hall in the New York Times building is suing Kushner Companies, accusing the landlord of relying on “alternative facts” to renege on promises made about the space.

OHM Concession Group alleges that despite Kushner representatives repeatedly describing frontage and space on 44th Street — dubbed “the Bridge” — as part of its 11,970-square-foot lease at 229 West 43rd Street, the landlord changed its tune and asserted that the area was to be shared by neighboring tenant, National Geographic. OHM claims loss of the space will result in a 20 percent loss in annual net operating income (pegged as $6 million), since the company planned to install a high-end champagne bar in the space. OHM also alleges that loss of the Bridge means loss of 90 percent of its expected foot traffic from pre- and post-show theatergoers.

Representatives for Kushner maintain that the Bridge was never part of the lease. In a Feb. 15 letter to OHM, provided to The Real Deal by Kushner, an attorney for the developer, Janice Mac Avoy of Fried Frank, states that though Kushner was willing to let OHM use the Bridge — as long as it didn’t interfere with other tenants — such an allowance “did not magically convert” the space into part of OHM’s food hall. The letter also dismisses the idea that the Bridge could house a champagne bar, since the lease only allows for the use of a “food hall.”

Christine Taylor, a spokesperson for Kushner Companies, indicated that the company plans to file its own lawsuit on Tuesday alleging that OHM violated the terms of its lease by falling significantly behind in renovating the space and for owing nearly $100,000 in unpaid rent.

”OHM, aware that we were about to file a lawsuit against them for being in default of their lease agreement for not opening their food hall by the date set in the lease, rushed to file their own suit filled with untruths, misrepresentations, and salacious and false accusations in an attempt to litigate in the press rather than meet their plain leasehold obligations,” Taylor said in a statement.

OHM inked the 15-year lease in August 2016 after tapping English to open a food hall, called the American Market, in the space. In November 2017, English backed out of another food hall he planned to open in Chelsea. The move came after news that a server at his restaurant at the Plaza Hotel accused him of sexual harassment.

“To my knowledge, this has nothing to do with Todd English’s past troubles or any hint of him wanting to pull out of the project,” said Richard Kaye, at attorney for OHM, noting that his client was “enthusiastic” about pursuing the project with English.

Representatives for English could not immediately be reached for comment.

OHM is seeking to end its lease and to recoup at least $3 million in damages to cover, in part, the $2.7 million the company’s already invested in renovating the retail condo. In the lawsuit, which was filed on Monday in state Supreme Court, the company refers to Kushner’s claims about the lease as “alternative facts” and as part of a “spectacularly well-documented fraud.”

In January, Bloomberg noted that Kushner’s six-floor retail space faced some financial hurdles, including the fact that construction on the food hall hadn’t yet started, Guy Fieri’s restaurant is closing and projected rent revenue from those spaces accounts for $9.9 million of the $24 million anticipated at 100 percent occupancy. With operating costs and interest payments totaling about $22 million per year, according to Bloomberg, Kushner is at risk of losing money if tenants stop paying rent.

A representative for Kushner indicated that a new tenant for Fieri’s space is expected to be announced by the end of the month.