The Real Deal New York

Brookfield, Waterman take over ground lease at Lever House amid RFR’s refi woes

Bondholders had initiated foreclosure on property
By Kathryn Brenzel | July 23, 2018 06:36PM

From Left: Brookfield’s Ric Clark, Lever House at 390 Park Avenue, and RFR Holding’s Aby Rosen (Credit: Google Maps and Getty Images)

Brookfield Properties and Waterman Interests have taken over the Lever House’s ground lease, seemingly replacing RFR Realty after the company struggled to refinance the property.

The two companies announced on Friday that they formed a joint venture to take over a long-term leasehold at 390 Park Avenue. The joint venture is leasing the property from an affiliate of Omnispective, which is run by the Korein family. Terms of the deal weren’t immediately available on Monday.

It also wasn’t immediately clear whether Aby Rosen and Michael Fuchs’ RFR remained involved in the deal on any level, nor was it apparent how the transaction with Brookfield and Waterman came about. Representatives for RFR did not immediately return requests for comment, and a spokesman for Brookfield was not available to provide further details.

The 21-story tower has been in limbo since RFR defaulted on a $110 million commercial mortgage-backed securities loan in March 2015. RFR, which had entered its ground lease for the property in the late 90s, was struggling to refinance because of a rent reset: Under RFR’s agreement with the Korein family, the annual ground lease rent was set to increase $20 million in 2023, a huge jump from the current $6 million. In November 2016, servicer CW Capital filed to foreclosure on the property.

Rosen told The Real Deal last year that he was hopeful that a deal with the Korein family could be worked out. At the time, he said the family wasn’t interested in someone else taking over the 267,000-square-foot building.

Meanwhile, for Brookfield’s part, the Canadian giant has been on a tear the last six months, taking on roughly $1 billion in major development projects in the five boroughs. In May, news surfaced that the company would invest as much as $700 million into Kushner Companies’ 666 Fifth Avenue.