By Hadassa Kalatizadeh
Brookfield Properties, New York City’s largest commercial landlord, along with Waterman Interests have together enlisted the help of a state court to help them gain control of Lever House, one of the most iconic office buildings on Park Avenue. The Lever House, at 390 Park Avenue on 53rd Street, is currently controlled by landlord Aby Rosen.
Rosen, who co-founded RFR Realty and is a real estate tycoon owning roughly 70 properties in the U.S., took over operations at the 260,000-square-foot modernist building in 1998. He secured a 99-year ground lease from the Korein family, which allowed him to operate the property in exchange for annual rental payments. The prized 21-story glass tower, opened in 1952, is renowned for its midcentury architecture and has attracted top-named financial firms as tenants. The building, now a landmark, was NYC’s second curtain wall skyscraper built.
Two years ago, the Korein family, the original leaseholder, signed a separate ground lease with Brookfield and Waterman, encouraging the two investors to basically take over Rosen’s place as operator of the property if they could tear it back from him in a rent dispute, as per Crain’s NY. The pair is hoping a judge can help them reset the ground rent at the office building, thereby loosening Rosen’s grip over it. Last year the pair’s plans were thwarted by Rosen, who sued Waterman Interests for fraud, preventing the ground rent reset.
Ground rent at the building was due to be reset on the first day of 2020. Till now that rental sum was about $6 million annually. The lease reset was set to bring the new rent price to 7.5 percent of the property’s fair market value, which could by some estimates bring the sum up to $20 million. The question of questions remains: what is the building’s fair market value that can be agreed upon. Brookfield and Waterman obtained an appraisal for the property late last year, and Rosen commissioned an appraisal of his own. When they could not agree, Rosen rejected a tie-breaking evaluation by a third appraiser.
As reported by Crain’s NY, on Friday, Brookfield and Waterman filed a petition, requested that a judge break the standoff and appoint an appraiser to help dictate a market value on the building, allowing the rent to be reset. This petition basically asks that the judge appoint a third appraiser to settle the disagreement and assign a new ground rent. “Counsel for respondents indicated that ‘tenant is not prepared to agree on an appraiser at this time,'” the suit alleges.
The building will also soon need millions of dollars in updates, as much of its original appeal has dimmed with time, and it may begin to struggle to compete with the city’s newly constructed office buildings. The building is already seeing vacancies, with tenants that have grown tired of the dispute. The building’s operator will need to spend on upgrades to re-establish the office tower’s place at the top.
Brookfield declined to comment on the suit, while a rep for RFR Realty, Rosen’s real estate firm, did not immediately respond to request for comment.
