Truth Social backer sues SL Green, RXR, NY REIT for $30M

Truth Social backer Patrick Walsh is suing three big New York landlords for $30 million for allegedly allowing sewage to leak into his Midtown gym, among other maintenance-related complaints. 

TMPL Gym at 355 West 49th Street, where rent is $137,000 a month, alleged this week that it has lost 500 members as a result of the poor condition of the building, which is part of the Worldwide Plaza complex owned by NY REIT, SL Green and RXR through a limited partnership.

“The premises smells of waste and feces after each flooding incident,” states the gym’s complaint.

The lawsuit also alleges the landlord failed to cool the water for the air conditioning units, which caused them to shut down, and that neighboring residences and restaurants were allowed to siphon the gym’s hot water, leaving members to take cold showers.

RXR manages the space and owns 25 percent of Worldwide Plaza. SL Green also owns 25 percent and NY REIT owns 50 percent, according to a spokesperson for SL Green. The owners either declined to comment or did not immediately respond to requests for comment on the lawsuit.

Walsh, who invested $6 million in Truth Social, blames the maintenance issues for his gym’s negative reviews, which he claims have harmed the business’ reputation.

“They recently ‘updated’ the men’s locker room which was a joke,” one two-year member wrote on Yelp in January. New flooring and cheap fixtures for the sinks and showers (which are already breaking). NO HOT WATER. This happens all the time. In my two years the water has rarely been warm, even on slow days.”

The sewage leaks were caused by the owner’s failure to clean the “ejector pit”, and repeated floods over the past three years allegedly damaged the gym’s sound system, in addition to posing a health problem, the suit alleges.

The complaint comes roughly three months after Walsh settled a lawsuit with TMPL Gym’s former owner, David Barton, for an undisclosed amount. Barton alleged he lost $250,000 that SL Green kept in escrow when he sold the gym because Walsh was chronically late on rent. Litigation went on for more than three years and escalated to include allegations of fraud and theft.

Walsh denied any wrongdoing.

SL Green’s troubles at Worldwide Plaza go far beyond Walsh’s lawsuit. Green and RXR bought a 49.9 percent stake in the complex in 2017 at a valuation of $1.7 billion. The 2-million-square-foot complex, which occupies the entire block between West 49th and West 50th streets on Eighth Avenue, recently had its implied value cut by $500 million by Evercore ISI, a Wall Street securities firm.

The reduction is the result of the impending departure of law firm Cravath Swaine & Moore, which leases a third of the office space at One Worldwide Plaza and pays half the building’s rent. Japanese investment bank Nomura Holdings, which pays 30 percent of the rent, may also leave, according to Crain’s.

A $940 million loan secured by the property was placed on a watchlist in September because analysts predicted the landlord would struggle to maintain its high occupancy as leases expired.

Cravath’s 600,000-square-foot space has been available for more than four years, according to Wharton Property Advisors’ Ruth Colp-Haber, who told Crain’s it would take about $90 million to update the space for an incoming occupant.

This article has been updated with more complete information about the ownership of Worldwide Plaza and other details.

Read more

New York

Hell in Hell’s Kitchen: Truth Social investor, gym mogul settle dispute

New York

SL Green, RXR’s Worldwide Plaza value cut by $500M