Aby RosenLately it seems developer Aby Rosen’s every business relationship is worthy of its own daytime soap opera. While Rosen and his company RFR Holding have been in the news a lot since the downturn hit because of struggles at 610 Lexington Avenue, which is on the brink of foreclosure, and because of a split with hotelier Ian Schrager, in the last few months the headlines have been even more fast, furious — and personal — than normal.
In May and June alone, multiple news outlets, including The Real Deal, have published accounts of Rosen’s business feuds. They include: turmoil with his long-time business partner and friend Michael Fuchs; a nasty lawsuit filed by investor Harry Lis involving the sale of one of their joint investments; and a salacious dispute Rosen had with billionaire partner Peter Brant, who is selling his stake in RFR’s Seagram’s Building. According to Crain’s, Brant is selling his stake partially because of “disparaging remarks” Rosen and Fuchs made about Brant’s wife, Stephanie Seymour. At the time the two were going through a divorce, but they’ve since reconciled.
But now — after keeping mum for several weeks — Rosen is firing back, saying that while he may be involved in several simultaneous disputes, there’s nothing personal about them, and that some of them are starting to be resolved.
In an exclusive interview with The Real Deal last month, Rosen said he’s had enough of the gossip and the rumors of his demise from people who don’t understand the business and know even less about him.
“Everyone is trying to make it look like a drama, and it is very un-dramatic,” said Rosen at his 390 Park Avenue office.
While Rosen acknowledges he got caught up in the go-go atmosphere of the boom, he said he’s taking too much of a public pounding. He said there are problems in his portfolio, but he characterized them as issues involving some of his partners keeping their end of the bargain when the going got tough and when investment returns were less than satisfactory.
“If you are a capital or operating partner, you have to perform,” Rosen said. “If someone is an operating partner of mine, and he doesn’t perform as he should perform, I should have the right as a capital partner to ask him to step aside.”
No bad blood
The biggest of his most recent spats concerns Brant, who bought a stake in the landmark Seagram’s Building at 375 Park Avenue when RFR bought the property for $375 million in 2000.
Yet Rosen claims Brant’s decision to sell had nothing to do with any personal animus, or that it had anything to do with Brant’s marriage: “Peter Brant is one of the most knowledgeable and smartest investors I’ve ever met.”
Despite the chronicles of their battles, Rosen insisted that Brant simply wants the capital from the sale to “shore up his share in the paper business.”
Rosen and Fuchs have been investors in Brant’s White Birch Paper Co., a Canada-based newsprint company that filed for bankruptcy protection in February 2010.
Brant, who acquired paper mills almost as aggressively as Rosen bought real estate, was hit by a severe downturn in newspaper readership, which wreaked havoc on his once-lucrative business.
Brant declined to comment on any specifics, but issued a statement saying: “A substantial offer was made for my share of the Seagram Building that provided for a great return on my investment. I chose to accept this offer and will employ the capital elsewhere. Aby Rosen and Michael Fuchs remain close family friends.”
Meanwhile, Rosen is working to put out another fire with long–time investor Harry Lis.
In court documents, Lis’ company, Lis and Gan Global Investments, claimed Rosen spent its $7 million share of proceeds from the sale of 451 Lexington Avenue on RFR’s other properties. Rosen told The Real Deal (as has been stated in court documents before) that RFR has always treated the portfolio as one entity, and reinvests profits directly in other properties. Rosen also sued Lis, alleging that Lis refused to participate in additional requests for capital calls.
“We had asked him, like most of our partners, to participate in capital calls. In difficult times you need to rely on your partners to put in [their] share of the money,” Rosen said.
Sources say, however, that Lis and Rosen settled part of the dispute early last month with Rosen paying the vast majority of what Lis said he was owed. Sources close to Lis insist he has more than met his obligations as an investment partner.
“There has been no shortage of capital calls that he’s made,” said a source close to Lis.
Court documents indicate that a hearing on the case is set for July 7.
But Lis has also filed a related judgment against Rosen for properties in Stamford, where he’s alleging that funds from his investments are also being used to help shore up RFR’ s struggling portfolio.
In addition to the first Lis case, Rosen appears to have settled another of his more recent financial headaches — the $17 million foreclosure suit at the Chinatown Brassiere site at 380 Lafayette Street.
Mission Capital Advisors put the property on the market in March. That was after special servicer LNR Partners filed suit to foreclose on the retail condo when RFR fell far behind on loan payments. But Rosen said that in recent weeks RFR has re–acquired the note, and is negotiating a deal to put a new restaurant in that location.
More than coincidence?
Still, some say that Rosen’s back-to-back disputes seem to be more than just a coincidence. “There are enough of these disputes that it does raise questions about something going on,” said Ben Thypin, senior market analyst at real estate data firm Real
What’s more, Rosen’s troubles are not limited to his commercial properties. Unit owners at 50 Gramercy Park North, a 23–unit luxury co-op next to the Gramercy Park Hotel, have filed a $3.1 million suit against Rosen, Fuchs and Schrager, alleging the developers failed to repair a number of construction defects and mechanical problems there.
They say the developers have failed to meet with the unit owners and have yet to respond to the complaint. “We’re still waiting for a response from the defendant,” said Kent Karlsson, attorney for the unit owners.
Meanwhile, sources say Rosen is quietly testing the market for a possible sale of 350 West Broadway, another high-profile residential project.
Rosen acknowledged that some in the industry think he needs to slash prices in the building, where units are priced at $8.6 million and $26 million, according to Street–Easy. But he denied that the building is for sale. He confirmed that power couple Jared Kushner and Ivanka Trump recently toured the seven-unit building’s $26 million penthouse, but said that has nothing to do with any possible effort to market the building.
Rosen’s recent struggles and entanglements haven’t stopped him from getting involved in new deals. In a move that surprised many in the industry, news broke last month that he bought the Paramount Hotel at 235 West 46th Street for $275 million.
Whether the Paramount deal is a beacon of hope or a blip on a dark screen for Rosen’s vast business empire has yet to be determined.