If someone pays for RFR Realty’s default at the Gramercy Park Hotel, a judge says it won’t be Aby Rosen.
Landlord Solil Management owns the dirt under the iconic hotel. The company sued to evict RFR and collect almost $80 million owed under the lease terms in April. The firm had been leasing the land for about $5 million per year, but stopped making payments in November 2020 after the hotel closed amid the pandemic.
A state Supreme Court justice has now ruled the real estate investor isn’t personally liable for the ground lease at the hotel, Crain’s reported. The ruling said the limited liability corporations that own the hotel could still be liable, although that remains to be seen; Rosen is the principal of those LLCs.
Between RFR falling behind on payments and Solil suing to terminate the lease, JPMorgan Chase sold a $75 million debt in January secured by the hotel to RDAC 8 LLC.
The hotel owner was compelled in July to pay $5.5 million in back rent and property taxes from November 2020, Crain’s noted. The status of the $80 million Solil was seeking has not been decided.
Solil’s lawsuit also involved allegations that RFR tried to renegotiate the 72-year lease at the hotel, removed art and furniture from the building, failed to make rent and tax payments, allowed the hotel to deteriorate, and that Rosen allowed his mother to stay at the hotel free of charge. Rosen denied all of those allegations.
RFR signed the lease in October 2006 to operate the hotel through 2078, according to Solil. Four years later, Rosen bought out his partner — hotelier and developer Ian Schrager — and took full control of the hotel.
Rosen has a history when it comes to claims of default and overdue payments.
In 2017, Rosen faced foreclosure at Lever House at 390 Park Avenue as he struggled to refinance a $110 million loan. A partnership between Brookfield and Philip M. “Tod” Waterman III ultimately took control of the building.
More recently, Rosen in 2020 fell behind on payments for a $25 million CMBS loan for four commercial condo units at the base of the Core Club, which he purchased in 2016.
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[Crain’s] — Holden Walter-Warner