Chrysler Building's owner bets on New York nostalgia

New York

AS Aby Rosen was dog-sledding in Norway, skiing in Japan and snorkeling in St Barts last month, one thought was constantly on the mind of the real estate tycoon and art collector: The Chrysler Building.

"We were on holiday for two weeks and every day he was talking about the Chrysler," said Alberto Mugrabi, Mr Rosen's friend of almost 20 years.

The Chrysler Building, its shining spire and eagle gargoyles among the most iconic symbols on Manhattan's skyline, is the latest jewel in Mr Rosen's real estate empire.

His RFR Holding bought the 1930 landmark office tower for US$151 million. While the price was a discount of about 80 per cent from the previous sale, an expensive ground lease brings rising costs, the same issue that got RFR in trouble before.

"The Chrysler Building is one of the finest and most recognisable New York City architectural assets - I only invest in quality and take on the responsibility to rehabilitate and maintain these cultural gems," Mr Rosen said. "As far as the land lease, you work things out." As much as any of RFR's properties, it lies at the intersection of Mr Rosen's dual careers in art and real estate. The building evokes the grandeur of the Gilded Age with its marble lobby, Edward Trumbull ceiling mural, and the intricate, wood-inlaid doors of its 32 elevators.

At RFR, the Chrysler Building joins a portfolio of more than 75 office, hotel, retail and residential properties in the US, Germany and Israel. Its New York investments include two modernist icons on Park Avenue, the Seagram Building and Lever House.

Mr Rosen, 58, has so far said little about his plans for the building. He plans to bring back the Cloud Club, the venue that occupied Chrysler's 66th to 68th floors from its opening until 1979, operating as a speakeasy during prohibition.

He also plans to expand and improve amenities for the public and tenants on the arcade level, including restaurants, hair salons and shoeshine shops. He had earlier considered bringing in a hotel, but has subsequently dropped that idea, he said.

"Aby's genius is that he can pick these amazing, iconic buildings that were falling apart and he brings them back to their original state," Mr Mugrabi said. "He sees these buildings like works of art."

The Chrysler Building's days as a premiere office location have likely passed, as more modern buildings in midtown Manhattan and on the west side at Hudson Yards draw tenants seeking updated technology and amenities.

The property's aging interior was one reason that Mr Rosen's RFR and Austrian real estate firm Signa Holding got it at a steep discount to the US$800 million that the Abu Dhabi Investment Council paid in 2008 for a 90 per cent stake in the 77-storey tower near Grand Central Terminal station.

The land under the Chrysler Building is owned by Cooper Union, which last year raised the annual fee to US$32.5 million from US$7.75 million, and has more increases planned, according to the school's financial statements.

Ground leases have spelled trouble in the past for RFR. In 2015, the developer defaulted on a loan for Lever House, another landmark Manhattan skyscraper that's subject to increasing land rents. The debt sold earlier this year for a significant loss, according to mortgage data firm Trepp.

Real estate and art are in Mr Rosen's blood, who was born in Frankfurt, the son of Holocaust survivors. His late father went on to become a developer; his mother is a painter. Mr Rosen moved to New York in 1987. Four years later, while the property market slumped, he teamed up with childhood friend Michael Fuchs to form RFR.

A savvy collector with more than 1,000 works, Mr Rosen uses paintings and sculptures by blue-chip artists throughout his buildings to enhance their value and maximise returns.

At Lever House, the glass-ensconced lobby has an art programme overseen by Mr Rosen and Mr Mugrabi, a collector and private art dealer. Over the past two decades, it has exhibited works by more than 40 contemporary artists. Damien Hirst filled the space with pickled animals in glass vitrines. Barbara Kruger wrapped its walls and floor in massive black and white texts.

Art has given Mr Rosen big returns over the years. For example, a canvas depicting loops of dripping red paint by Cy Twombly, which Mr Rosen bought in 2005 for US$3.5 million from Gagosian gallery, hung in the lobby of RFR's Gramercy Park Hotel when it opened after a redesign in 2006. It then spent years at his house, Mr Rosen said in a recent interview. In November 2017, he sold it anonymously at Christie's for US$46.4 million.

But art has also gotten him in trouble. There was the time he removed a giant Picasso tapestry that had hung since 1959 in the Four Seasons restaurant in his Seagram building, setting off a public uproar and a lawsuit by the New York Landmarks Conservancy.

For now, the Chrysler Building dominates the east side of Manhattan, a canvas for its new owner's vision, whatever that turns out to be. But its prominence on the skyline may not last, after a 2017 rezoning of the area that allows taller towers, such as SL Green Realty Corp's One Vanderbilt, under construction just two blocks away. As developers build ever higher, the Chrysler Building will eventually be dwarfed.

Mr Rosen said he's not worried. "Even if obscured, its history and design will transcend time," he said, adding that it will always be across the street from Grand Central.

Adelaide Polsinelli, a broker at New York City-based Compass, said Mr Rosen knows what he's doing. She remembers 190 Bowery, an aging limestone building that RFR agreed to buy and flip in 2015. "He went in there and paid more than anyone else would pay because he saw that the architecture and the interior was so unique and different," Ms Polsinelli said. "He had an eye for the quality product that's kind of hard for most people to wrap their heads around. He looks at real estate very differently. He looks at it as a trophy." WP