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MSD Partners lends $100M on Carnegie House land
David Werner, Rubin Schron in line for huge rent hike at West 57th Street co-op
Rubin Schron, MSD Partners CEO Gregg Lemkau and 100 W 57th Street (Getty, MSD Partners, Google Maps)
MSD Partners is teaming up with David Werner and Rubin Schron at a 57th Street parcel that has been plagued by a ground lease dispute.
The Michael Dell–backed merchant bank affiliate is lending the duo $100 million secured by the property underneath a 324-unit land lease co-op called Carnegie House, according to PincusCo.
Werner and Schron bought the land below the co-op for $261 million in 2014 and have been in a legal battle with residents of the building since last year.
Shareholders involved in the lawsuit are contesting the terms of the ground lease, which is set to expire in March 2025. The rent is about $4 million, but the complaint estimates it will soar to more than $27 million when the land is reappraised in accordance with the reset.
MSD’s infusion likely means the firm does not consider the lawsuit or pending legislation in the New York State Assembly as a major threat to Werner and Schron’s ability to raise the rent, according to Pincus.
Werner and Schron offered residents the option to purchase the underlying land for $280 million in 2019, but shareholders declined, as many were concerned they wouldn’t be able to afford it, according to the lawsuit.
The building’s impending financial distress prompted some owners to put their homes on the market despite prices being depressed by the predicament. Since 2019, few apartments at the co-op have sold for more than $200,000.
MSD Partners is an affiliate of BDT & MSD Partners, led by Byron Trott and Gregg Lemkau. MSD Partners was backed by the billionaire founder of Dell Computer and merged with BDT & Company last October.
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MSD Partners declined to comment on the deal. A spokesperson for Schron did not immediately respond for comment.
Schron, whose firm is Cammeby’s International Group, is one of the largest residential landlords in the city, a developer and a significant investor in apartments across the country. His assets include the Woolworth Building and Industry City, and he’s working to develop a three-tower project in Coney Island.
Werner is a prolific real estate investor whose assets include Pfizer’s Midtown East headquarters.