A wrestling match over control of the landmark

REAL ESTATE

Chrysler Building owners do not own the land it sits on

Legal maneuvers and an empire in tatters has left the ownership of the once grand Manhattan skyscraper – the Chrysler Building, second from the right – up in the air. KARSTEN MORAN — THE NEW YORK TIMES

The landmark Chrysler Building in midtown Manhattan. GEORGE ETHEREDGE — THE NEW YORK TIMES

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By Philip Kaleta

The New York Times

NEW YORK >> The owners of the Chrysler Building in Manhattan are at risk of eviction after the real estate empire of one of its owners imploded amid allegations of financial impropriety.

Signa Holding — led by René Benko, an Austrian investor whose company assembled a worldwide portfolio worth more than $20 billion before it fell apart late last year — teamed up with RFR Holding, a New York company led by Aby Rosen and Michael Fuchs, to buy the Chrysler in 2019 for $151 million. The partners promised to return the aging dowager of the New York skyline to its glory days.

But the partners didn’t acquire the land below the building. Rather, they entered into a ground lease, which gave them control over the skyscraper itself for decades but required them to pay rent to the owners of the land beneath it. This arrangement, while not unusual in New York City real estate, can make for a complicated relationship between landlord and tenant.

The landowner, the Cooper Union for the Advancement of Science and Art, a private college which uses the rent from the building to subsidize student tuition, recently announced it was terminating the ground lease and taking control of the building, claiming the partners were months in arrears, according to documents reviewed by The New York Times.

“You have a contractual obligation to pay your rent,” wrote Steven Klein, a lawyer representing Cooper Union, wrote to the owners in a letter dated Sept. 27.

The owners filed suit in New York state court to try to halt the eviction by Cooper Union. Signa referred all questions to RFR, which declined to comment.

In late November, Benko’s empire crumbled under the weight of over $20 billion in debts owed to a consortium of global investors. The downfall of Signa, which used to be one of Europe’s largest real estate players, left creditors scrambling to recoup their investments.

Benko’s defense lawyer, Norbert Wess, rejected claims of financial impropriety. “Mr. Benko is working with his lawyers to assist the prosecuting authorities and is presenting his position and point of view to them,” Wess said. “We are confident that this will dispel all accusations against our client.”

The Chrysler Building, the world’s tallest skyscraper when it was finished in 1930, has long symbolized New York’s romance with sleek design and height. But the art deco building’s fortunes have been buffeted by neglected repairs, a lack of modern amenities and vacancies after the pandemic.