Carnegie House Lease Dispute Goes to Schron, Werner

Co-op shareholders at Carnegie House were dealt a blow by the New York County Supreme Court, which ruled in favor of the parcel’s landowners, Rubie Schron and David Werner, in a dispute over the ground lease.

The court upheld a rent hike for the property’s ground lease, the Wall Street Journal reported, affecting the payments of hundreds of shareholders that may no longer be able to keep up with payments. The rent increase, enacted by Schron and Werner, is expected to bring the annual ground rent from $4.36 million to approximately $24 million.

“In the middle of a housing crisis, our billionaire landowners are pulling out all the stops to push out middle-class New Yorkers for their own gain,” Carnegie House board of directors President Richard Hirsch said in a statement, promising an appeal.

For his part, Hirsch’s monthly costs could nearly triple from $5,000 to $13,000.

A spokesperson for the landowners said they were “prepared to work with permanent residents demonstrating a need for rental assistance.”

The ground lease rent at 100 West 57th Street on Billionaires’ Row expired on March 15. The lease was renewed, but the landowners and co-op did not agree on rent as a scheduled reset arrived last year.

Initial talks positioned rent at $40 million, 10 times the existing rate. The board came back with $5.4 million and then increased the offer by $50,000, according to court filings.

The owners then offered $25 million; the co-op would be responsible for 75 percent of the rent (10 percent of that is paid for by proceeds from the building’s garage), while the owners of the retail portion would cover 25 percent, a representative for the landowners confirmed over the summer.

The board and a limited liability company that controls the building’s retail space filed a lawsuit in September 2024 asking the court to temporarily halt ground lease negotiations, but the judge declined that request two months later and dismissed the case entirely in March.

If Carnegie House fails to make good on its ground lease, it would lose it and the building would revert to rent-stabilization status, destroying owner equity while leaving shareholders stuck with mortgage payments.

The dispute already put out shareholders who struggled to secure mortgages due to the uncertain forthcoming costs of living in the co-op. Unit values declined during the fight and are well below market rate for the neighborhood.

Schron and Werner purchased the land underneath the building in 2014 for $261 million.

— Holden Walter-Warner