RFR Realty’s Aby Rosen is in talks to restructure the ground lease for the Chrysler Building.
Rosen, along with partner Sigma Holding GmbH, bought the landmark tower’s ground lease for $151 million from Tishman Speyer and an Abu Dhabi government fund last year. They pay Cooper Union, which owns the property, $32.5 million annually in ground rent, along with more than $23 million for what the building would typically owe in property taxes (though as a nonprofit, Cooper Union pockets this sum).
Those charges are expected to jump to $67 million by 2029. It’s unclear what changes Rosen is seeking to the terms of the lease, but the school may be exploring reducing the ground lease rates to ensure a flow of rent from RFR and avoid having to take over the property, Business Insider reports.
Since buying the ground lease, Rosen has cleared out the small retailers in the building with eyes on a reimagined retail arcade, as well as “destination dining and entertainment.” With the coronavirus crisis, the company will likely have a hard time filling those spaces.
“Those questions around retail and the timing of when it comes back haven’t been answered yet,” said Marc Frankel, a leasing executive at Newmark Knight Frank. “I wouldn’t plan on buying a property like the Chrysler Building today and leasing it up tomorrow. If you have the time to wait, everyone believes the market will be back. But if you can’t wait and you need to fill a space now, then you might have a problem.”
Rosen also faced a major rent reset at the Lever House at 390 Park Avenue, and defaulted on a $110 million loan backing the tower. He and RFR co-founder Michael Fuchs sued Tod Waterman, accusing him of fraudulently taking over the ground lease at the Midtown tower in 2018.
Last month, Rosen walked away from more than $600 million in deals. The abandoned deals included a $400 million buy of 900 Third Avenue in Midtown from Paramount Group and a retail condo at 1600 Broadway in Times Square that was on the market for more than $200 million.
[Business Insider] — Kathryn Brenzel