Fears for New York's iconic Chrysler Building as owners face eviction before renovating landmark

The future of the iconic Chrysler Building in New York City is uncertain as its owners face eviction – leaving Gotham's skyscraper crown jewel at risk of falling into disrepair.

The owner of the land on which the skyscraper sits says he has terminated the building's buyer's lease and taken control of the Art Deco gem in midtown Manhattan.

In 2018, just before the buyer took over the land lease, annual payments to the owner were $7.75 million, The New York Times reported.

That number has skyrocketed to $32.5 million per year and is expected to increase to $41 million by 2028.

The Chrysler Building was the tallest in the world when it was completed in 1930, being surpassed shortly after by the Empire State Building.

Despite being one of New York's most celebrated and instantly recognizable skyscrapers, its interior is in desperate need of repairs, modern amenities and new tenants to replace those who fled during the Covid-19 pandemic.

René Benko is the founder of Signa Holdings, which held a 50% stake in the iconic Manhattan skyscraper

Signa Holding – led by Austrian investor René Benko – and New York company RFR Holding, purchased Chrysler in 2019 for US$151 million.

Signa and RFR, who each held a 50 percent stake, promised to return the famous skyscraper to its former glory.

That goal never materialized, as Benko's company faced $20 billion in debt and investigations by European prosecutors.

The building's owner, Cooper Union for the Advancement of Science and Art, a private college that uses rent from the building to subsidize student tuition, stated in a September 27 letter that Signa and RFR were months behind in paying their rent.

“You have a contractual obligation to pay your rent,” Steven Klein, an attorney representing Cooper Union, wrote in the letter obtained by The Times.

Signa and RFR filed suit the day before in New York State Court to try to stop the eviction, and that process is ongoing.

Five years ago, they bought the Chrysler thinking it was a bargain. Its price of US$151 million was a fraction of the US$800 million paid by former owner Abu Dhabi Investment for a 90% stake in 2008.

In this iconic photo, a man is pictured lighting a co-worker's cigarette as they take a break in one of the Chrysler Building's gargoyles.

The rents demanded by Cooper Union, which owned the land beneath the building until the year 2147, make it impossible to turn a profit, according to a person familiar with negotiations between the college and the building's owners who spoke to The Times.

In 2018, just before Signa and RFR took over the land lease, annual lease payments were $7.75 million. They now cost $32.5 million a year and are expected to increase to $41 million by 2028.

Cooper Union was willing to restructure the lease with RFR twice, once in 2021 and in 2023, according to a person familiar with the negotiations who spoke to The Times.

Terms were agreed both times, only for things to fall apart.

In their recent lawsuit Signa and RFR called the restructuring terms 'draconian' and 'unrealistic'.

They also claimed the building was in worse condition than they were led to believe before purchasing it, according to the lawsuit.

The Chrysler Building pictured in 1929, when it was the tallest building in the world

RFR and Signa were making only minor renovations throughout their property, thinking they would be able to revitalize the building after reaching an agreement with Cooper Union on the land lease.

The plan was to resolve their legal disputes, then renovate the Chrysler and fill it with new tenants, such as law firms.

The first signs of trouble appeared in November, when Signa collapsed under the weight of the 20 billion dollars it owed to the royal families of Qatar and Abu Dhabi.

Abu Dhabi's Al Nahyan family, which controls Mubadala Investment Company, alleged that Benko defrauded them of at least $834 million, according to a lawsuit filed in France.

Benko's lawyer, Till Dunckel, denied this, claiming that Mubadala only invested US$650 million while receiving interest payments.

The lobby of the Chrysler Building on December 27, 2023

An elevator door in the lobby of the Chrysler Building, designed by legendary architect William Van Alen

Signa filed for insolvency in Austria, ending the partnership between RFR and Signa.

Signa's share of Chrysler is now up for sale as liquidators seek to offload the company's most valuable assets to pay creditors.

Cooper Union accused Signa and RFR of misrepresenting their finances during Chrysler lease negotiations.

The college claimed it owed $21 million in back rent since May, according to the letter shared with The Times.

Now, real estate firm Cushman & Wakefield has been hired to manage the building.

RFR lawyers attacked Cooper Union for sharing the letter with the media just one day after they filed the lawsuit on September 26.

“Cooper Union’s misguided decision to share its inaccurate and self-serving letter with the media is a transparent and desperate attempt to divert attention and create a false narrative around the initiation of legal proceedings against it just hours earlier,” the lawyers said. of RFR, Terrence Oved and Darren Oved, told The Times in a statement.