With New York in crisis, real estate pitches in

Companies’ good deeds bolster relationships, public image

James Whelan, Scott Rechler and Jonathan Gray (Credit: Rechler by Eugene Gologursky/Getty Images; Whelan by Axel Dupeux; Gray by Drew Angerer/Getty Images; CDC)
REBNY's James Whelan, RXR's Scott Rechler and Blackstone's Jonathan Gray (Credit: Rechler by Eugene Gologursky/Getty Images; Whelan by Axel Dupeux; Gray by Drew Angerer/Getty Images; CDC)

UPDATED, April 10, 2020, 10:21 a.m.: As the coronavirus overwhelmed city hospitals and left record numbers of New Yorkers suddenly unemployed, Brooklyn landlord Mario Salerno waived April rent for 80 tenants across his 18-building portfolio. A&E Real Estate Management gave its tenant Sauze Pizzeria, which has been donating pizza to medical workers, a three-month break on rent.

Lobbyist Suri Kasirer said the responses were no surprise.

“This is an industry that’s always stepped up and really feels a tremendous civic responsibility,” said Kasirer, whose eponymous firm represents many real estate companies.

Starting in mid-March, the firm began asking all of its clients what they could offer the state and city. It also asked what help clients needed from the government — after all, that’s a lobbyist’s job. But Kasirer said clients were focused on what they could contribute and that many wanted to give “very quietly.”

“I don’t think anybody wants to be viewed as doing it for any reason,” she explained. “Everybody’s simply saying, ‘Look, we want to do the right thing and we want to help because we’re committed to New York.’”

Experts say a crisis is a chance for businesses to strengthen relationships with clients and employees.

“For companies, it’s an opportunity to step up and do the right thing, and create bonds that will hopefully benefit them for many years to come,” said Ted Birkhahn, who leads New York-based public relations firm Hot Paper Lantern. “There’s also the risk you run if you don’t do anything and you’re in the position to do so.”

The more severe the crisis, the bigger the opportunity, according to Birkhahn, which means the spotlight is on well-heeled companies as the pandemic brings the economy to a standstill and kills New Yorkers by the hundreds.

For real estate in particular, the stakes may be even higher. The pandemic comes after a year of the industry being portrayed as greedy and corrupt by tenant organizers and lawmakers — many of whom pride themselves on not taking its donations.

“This is a crisis on steroids,” Birkhahn continued. “The impact — negative or positive — on brands will be amplified much more during this crisis than it would have been in previous ones.”

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Many real estate owners and operators have stepped up, according to Gov. Andrew Cuomo. He released a list of donors in late March both to thank them and to elicit donations from others.

His list cheered hotels including the Four Seasons and St. Regis for giving free rooms to healthcare workers and patients. Major real estate investor SoftBank donated more than 1.4 million N95 masks, while retailers such as Uniqlo and the Estée Lauder Companies proffered thousands more masks and bottles of hand sanitizer.

“New York is fighting a war against this virus and we need all the help we can get,” Cuomo said in a statement.

Birkhahn said companies that help for the wrong reasons more often make mistakes in communicating with their clients and the public.

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“The general rule of thumb is actions speak louder than words,” he said. “But you should be doing it because it’s the right thing to do.”

One of the heftiest public donations in New York — a $15 million commitment to help first responders and local food-delivery organizations — came from Blackstone, one of the world’s largest landlords.

The past few years have been bumpy for the company in New York. As the owner of the 11,000-unit complex at Stuyvesant Town and Peter Cooper Village, Blackstone has been embroiled in litigation to prevent some units from being deregulated and accused of keeping others vacant.

But as job losses spiked in late March, Blackstone unveiled an assistance program for all of its New York City residential tenants — allowing rent deferrals or the application of security deposits funds toward rent; waiving late fees; refunding credit-card payment fees; and waiving fees related to breaking a lease.

“This program is our initial step to help mitigate a challenging environment,” said Kelly Vohs, who runs the Blackstone company that manages the complex, in a public statement. “Our intent is to continue to evaluate our response in the weeks ahead.” A Blackstone spokesperson declined to comment further.

RXR Realty also made a major contribution: $1 million to support New Rochelle, an early Covid-19 hot spot in New York. RXR is the master developer of the town and controls a substantial portion of its real estate downtown, which was part of a zone the Cuomo administration set up to contain the virus.

David Garten of RXR called the donation — directed by the company’s founder and chief executive Scott Rechler — “a no-brainer.”

“In these times of crisis, the industry should certainly be stepping up,” said Garten.

RXR also launched a peer-to-peer network late last month among its employees and tenants to promote pro-bono skill sharing so lawyers, financial analysts, accountants, and graphic and web designers could help RXR tenants pivot their operations or apply for assistance.

“We want to work together with all of our tenants,” said Garten, who said RXR is handling requests for rent relief on a case-by-case basis.

On the residential side, the Real Estate Board of New York took an early stance in favor of a moratorium on evictions. On March 13, hours after Cuomo announced a one-week ban on evictions, more than two dozen REBNY members who collectively own about 150,000 rental apartments signed a pledge to halt evictions for three months. A&E, Blackstone and RXR were among them.

REBNY’s pledge conflicted with that of the Community Housing Improvement Program, a small-landlord group which cautioned against the moratorium without compensation for landlords. Kasirer praised REBNY’s move.

“Was it a smart thing to do? Sure. Was it getting ahead of something that might have come at them anyway? Maybe,” the lobbyist said. “But, you know, it was the right thing to do.”

Write to Erin Hudson at ekh@therealdeal.com

Update: This story has been updated to clarify details regarding a lawsuit against Blackstone and CHIP’s position on eviction moratoriums.