Judge Rules RFR Must Hand Over Control Of Chrysler Building To Cooper Union

A Manhattan judge has ruled that RFR Holding must allow Cooper Union to collect rents at the Chrysler Building while Aby Rosen and Michael Fuchs' firm fights to maintain control of the skyscraper through its ground lease.

RFR owes $21M in unpaid ground rent, and Cooper Union has pushed to terminate the lease as a result, asking a judge to enforce an eviction notice. RFR sued the private college in an attempt to void the termination.

The judge presiding over the case, Jennifer Schecter, issued an injunction in a hearing Thursday, ruling that Cooper Union can collect rents from the tenants in place at the landmarked 1.3M SF tower at 405 Lexington Ave.  

“[RFR] cannot take any steps to interfere with Cooper Union’s management or operations in control of the building,” Schecter said at the hearing, The Real Deal reported.

Attorneys for RFR had argued that the lease termination wasn’t valid because it had been sent to RFR’s current office rather than the office listed in the lease agreement. Judge Schechter called the argument “the flimsiest of flimsy,” per TRD.

A spokesperson for RFR said in a statement that its removal from managing the building “risks not only the building’s financial stability, but also its place in the heart of New York’s heritage and urban identity.”

“RFR’s temporary removal from the Chrysler Building, resulting in the halting of its multi-hundred-million-dollar restoration, is a tremendous loss for New York City,” the spokesperson said. “The Chrysler Building stands as a testament to architectural innovation, and RFR’s work has sought to honor and enhance that legacy.”

Cooper Union has tapped Cushman & Wakefield to manage the building going forward. A Cushman & Wakefield spokesperson declined to comment.

The school's vice president of finance and administration, John Ruth, said in a statement it is working with the real estate services firm to establish a long-term plan for the office building to maximize its value. Rents it collects are a key funding source for the school's operations.

“The Court clearly agreed that we were in our rights to terminate the lease, stating that Mr. Rosen and his partners had presented not one viable defense to the termination of the ground lease,” Ruth said in the statement. “The Court also noted as undisputed the fact that Mr. Rosen and his partners are $21 million in arrears to Cooper Union and that the college is being irreparably harmed by their interference with our contractual rights to receive sub-tenants’ rent.”

RFR’s attorneys argued that it stopped paying rent on the building in May because of Cooper Union’s handling of protests on campus surrounding the Israel/Palestine conflict, but Schecter said that there was no legal precedent for a tenant stopping rent over a landlord’s actions outside of the property, TRD reported.

Cooper Union and RFR had been due to amend the property’s pricey ground lease last year but failed to reach an agreement. Ground lease payments started at $32.5M a year when RFR acquired the building and are due to increase to $41M by 2028, The Wall Street Journal previously reported.

RFR acquired the 77-story building in a 50-50 partnership with Austrian investment firm Signa Holding, which filed for insolvency last year. RFR was a 50% owner at the time, having paid $150M for its stake.

An RFR spokesperson said it has spent more than $170M toward upgrading the tower, adding revamped food and beverage spaces, lifestyle spaces, and fitness and health amenities. Its renovation plans, which includes a refresh of the Cloud Club, a historic lunch spot on the 61st floor, are still incomplete.

Its office tenants have said the building has had issues with rodents and there are cracks in the ceiling of the lobby, The New York Times reported in July. Most of the building's retail space is empty, although it did sign British coffee chain WatchHouse to a 2K SF lease on the 43rd Street side of the building, Bisnow reported in May.

“Over the years, RFR has shown exceptional dedication to restoring and enhancing this historic property, to ensure it remains a leading address for tenants and a major asset for Cooper Union,” its spokesperson said. “This investment was not just about financial commitment; it reflects a broader vision to reestablish the Chrysler Building as a world-class office space.”

Sasha Jones contributed reporting for this article.

CORRECTION, NOV. 4, 10:15 A.M. ET: RFR hasn't completed its renovation of the Chrysler Building, including its work to update the Cloud Club. A previous version of this article misstated the status of the project. This story has been updated.