Aby Rosen Loses Control of the Chrysler Building as Judge Terminates RFR’s Ground Lease

Aby Rosen Loses Control of the Chrysler Building as Judge Terminates RFR’s Ground Lease

Edited by: TJVNews.com

Aby Rosen, the real estate magnate behind RFR Holdings, has officially lost control of the Chrysler Building, marking yet another high-profile setback in his once formidable Manhattan property empire. As reported by Curbed.com, a Manhattan judge ruled yesterday to terminate RFR Holdings’ ground lease, effectively ordering Rosen and his firm to vacate the iconic Art Deco skyscraper. The ruling also dismissed RFR’s claims against Cooper Union, the private art and engineering college that owns the land beneath the building, allowing the institution to move forward with new leasing arrangements.

The decision brings an end to months of legal battles and financial turbulence for RFR, which had fallen behind on lease payments last spring, triggering a September eviction motion by Cooper Union. According to the information provided in the Curbed.com report, RFR had stopped paying the ground lease altogether four months before the eviction filing, accumulating a staggering $21 million in arrears. Despite efforts to maintain its hold on the skyscraper, the court ruling clears the way for Cooper Union to seek a new partner, officially severing Rosen’s ties to one of New York’s most legendary buildings.

The loss of the Chrysler Building is just the latest in a string of defeats for RFR, which has also forfeited control of Gramercy Park Hotel and Lever House, both ground lease properties, in recent years. The report at Curbed.com detailed how Rosen, known for his ambitious property revamps, had been struggling to hold onto the Chrysler Building even before the pandemic devastated the Manhattan office market.

Rosen’s legal battle with Cooper Union took a controversial turn when RFR claimed that the college’s handling of an Israeli-Palestinian campus protest had “profoundly disturbed” the real estate community, leading to significant office vacancies within the building. However, the Curbed.com report highlighted that this argument failed to sway the court, as the judge dismissed RFR’s claims, instead ruling that Cooper Union had every right to terminate the lease due to nonpayment.

Despite an October 31st ruling allowing Cooper Union to take over rent collection and leasing responsibilities, RFR had remained in the building, hoping to reach a more favorable resolution. But yesterday’s final judgment means the firm must now vacate the premises, leaving Cooper Union free to chart a new course for the landmark tower.

Rosen’s 2019 acquisition of the Chrysler Building’s ground lease was viewed as a risky gamble from the outset. As Curbed.com reported, RFR, alongside its partner Signa Holdings, acquired the lease for a relatively modest $151 million—a fraction of the $800 million the building had previously sold for. However, the deal came with a massive financial burden: the ground lease was set to quadruple from $7.78 million to $32.5 million annually, a cost that the existing office rents inside the building could not sustain.

The report indicated that Rosen had planned to reposition the Chrysler Building as a trophy property, aiming to command significantly higher rents through an ambitious redevelopment strategy. RFR’s success with transforming properties like the Seagram Building gave some in the industry reason to believe he could pull it off. However, the pandemic derailed Manhattan’s office market, and the financial pressures mounted.

Rosen also appeared to have bet on renegotiating the lease with Cooper Union—a hope that, in hindsight, was never realistic. Previous owner Tishman Speyer had attempted to renegotiate the lease with Cooper Union and failed, and there was little reason to believe the college would change course for RFR. While negotiations did take place after the pandemic, sources told Curbed.com that discussions included a proposed $300 million lump sum payment in exchange for a more sustainable lease structure, but no agreement was ever reached.

Making matters worse for RFR, its financial partner Signa Holdings declared bankruptcy in November 2023, leaving Rosen to shoulder the costs of maintaining the Chrysler Building alone. According to the information contained in the Curbed.com report, by last fall, RFR was reportedly losing about $1 million per month on the building—a hemorrhaging situation that became increasingly unsustainable.

The court’s ruling yesterday means that while some financial details still need to be worked out, including how much RFR will ultimately owe to Cooper Union, the college is now free to explore new leasing arrangements. Partnering with Savills and Cushman & Wakefield since November, Cooper Union has already been moving toward securing a new long-term tenant or partner to manage the Chrysler Building’s future.

With RFR officially out, the future of the Chrysler Building now lies in the hands of Cooper Union. According to Curbed.com, the college, which has historically relied on revenue from its real estate holdings, will likely seek a new development partner to stabilize the building’s finances and explore possible redevelopment opportunities.

The broader question remains: Can the Chrysler Building become profitable again? With office rents still below pre-pandemic levels and the building’s aging infrastructure requiring significant capital investment, the next steward of this historic skyscraper will have to navigate a challenging commercial real estate environment.

For Rosen, the loss of the Chrysler Building is an undeniable blow, both financially and reputationally. As the Curbed.com report pointed out, RFR’s high-profile failures in recent years raise serious questions about its future in the New York real estate scene. Whether RFR attempts to appeal the ruling—or whether Rosen shifts his focus elsewhere—remains to be seen.

One thing is clear: the Chrysler Building’s ownership drama is far from over, but for now, it has slipped from Aby Rosen’s grasp.