RFR Sues Cooper Union in Bid to Block Eviction From Chrysler Bldg.
RFR Holding owns the ground lease to the Chrysler Building, with Cooper Union owning the underlying land. Cooper Union said RFR missed its June and July rent payments, and sent a 10-day termination notice on September 13. RFR wants this nullified.
Cooper Union, the Manhattan school that counts the land under the Chrysler Building as part of its portfolio, is attempting to evict the ground lease tenant out of the famed skyscraper after claiming they missed rent payments. RFR Holdings, along with Signa Holding GmbH, bought the ground lease for $150 million in 2019.
Cooper Union says that RFR has missed $21 million in payments since May, and sent a 10-day lease termination notice on Sept. 13. RFR rebutted by suing Cooper Union, claiming that the payment amounts–and therefore the termination notice–was in violation of the lease agreement. Therefore, they want the termination notice thrown out by a judge, or nullified.
“Indeed, not only did Defendant fail to properly serve upon Plaintiff a correct predicate default notice and notice of termination; but even the amounts demanded in those improperly-served notices are materially incorrect,” the lawsuit alleges.
RFR also sunk another $150 million in capital improvements into the building, which appear not to have rectified complaints from tenants. In a piece published by The New York Times in July, employees reportedly “complained of bad cell service, the lack of natural sunlight, elevator troubles, murky water coming out of fountains and pest infestations.”
In the lawsuit, RFR describes its capital expenditures as a civic duty: “Despite this economically disastrous environment, [RFR} remained committed to preventing the Chrysler Building, an icon of the New York City skyline, from deteriorating and falling into disrepair and decline....including [RFR] directly funding amounts to cover the Building’s tenants’ rental shortfalls.”
RFR further alleges that Cooper Union did not bargain with them “in good faith” during an attempt to renegotiate the ground lease, “despite the fact that landlords and tenants throughout New York City were routinely renegotiating their agreements to allow tenants to maintain their tenancies and recover.”
Annual lease payments totaled $32.5 million when RFR took over the building in 2019, which was set to increase to $41 million by 2028.
Cooper Union fired back in letter sent by the school’s attorneys to RFR’s attorneys. claiming that RFR is the party acting in bad faith, according to a letter first reported by The Real Deal. The letter claims that RFR “misrepresented” its financial situation to Cooper Union, leading them to falsely believe that “everything was under control.”
“As experienced asset owners and long-time financial fiduciaries, we find this deeply troubling,” the letter read. It further noted that Cushman & Wakefield will be taking over the property.
RFR was evidently furious with the leaking of the letter. “Cooper Union’s misguided decision to share its inaccurate and self-serving letter with the media is a transparent and desperate attempt to deflect attention from, and create a false narrative around, RFR’s commencement of a lawsuit against it mere hours earlier,” the leaseholder said in a statement to The Real Deal.
Cooper Union says that its collection of the building’s rent is key to its mission to return to the school to tuition-free model by 2028.