Aby Rosen’s bills keep piling up, and this time it’s a former top employee demanding to be paid.
Former RFR Holding president Jason Brown said that Rosen and his partner, Michael Fuchs, have failed to pay $20 million they promised him when he left the company five years ago.
The developers in 2019 agreed to pay Brown $25 million — presumably to cash out his stake in the company — across 10 installments with the final payment due at the end of 2027, according to a lawsuit Brown filed this week in Manhattan Supreme Court.
Rosen and Fuchs made the first two payments in 2019 and 2020 but then fell behind, and it appears Brown negotiated a payment plan to allow them to get right. They made two more payments in the following year but when the time came to make the fifth one this past January, Rosen and Fuchs pleaded for an extension.
Brown granted one until the beginning of April, and when the deadline came and went without payment he declared his former partners to be in default — demanding the unpaid balance of $20 million due immediately.
But unlike many of the lawyered-up disagreements that happen so often between former real estate partners, this one isn’t much of a squabble of who owes what and when. Rosen and Fuchs had previously signed a confession of judgment with Brown, meaning they waive their rights to fight back against his claims.
“I admit that I have not asserted and do not have any defense to justify, excuse, or otherwise defend against my default,” their confessions read.
A spokesperson for Rosen and Fuchs, however, said the company is “evaluating information that it recently became aware of which calls into question the obligation to make further payments and the validity of the buyout agreement.”
The spokesperson said the remaining balance due over the next several years totals approximately $10 million.
Brown was Rosen and Fuchs’ first employee when they started RFR in the 1990s, joining as an analyst after working at Insignia/ESG after graduating college. He touted RFR’s long track record and “ability to pay back money time and time again” as one of the company’s strengths during an interview in 2018.
But times have changed.
RFR has been hit with default notices left and right in recent years. The company is dealing with the same issues common to fellow real estate investors, including high interest rates and fallout from the pandemic. But some of Rosen and Fuchs’ problems predate those challenges.
Even before the onset of the pandemic, RFR had been struggling with trophy properties like the Lever House and the Gramercy Park Hotel, which the company eventually lost control of.
More recently, the $104.5 million mortgage on RFR office building at 90 Fifth Avenue was sent to special servicing in March, and a few days later Rialto Capital Partners said RFR failed to pay off $39 million in promissory notes last year that were part of the Signature Bank loan sale.
To be sure, it hasn’t been all black eyes for Rosen and Fuchs.
One of their prized properties, the landmarked Seagram Building, landed a $1 billion refinancing last year. The deal was seen as one of the largest votes of confidence in high-end office market during the era of Covid and high rates.
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