New York City’s Attorney General announced today that hedge-fund manager Steven A. Cohen’s Equinox Fitness Holdings of Brooklyn Heights, as well as the Equinox Towers Building in Manhattan, have agreed to change the way that real estate leases are written in a way that could allow the buildings to afford to add nearly 800 apartments on their top floors. (The Heights property, in particular, has also advertised plans to house an incubator for new businesses.) This comes just a month after Cohen was sued by Richard L. Powers, a teacher at Brooklyn Collegiate School who said that Cohen failed to keep up with rent payments.
The Press explains:
By changing the language in its leases with tenants, the Equinox teams of the Heights and Manhattan buildings are exploring how they could comply with existing city zoning laws and possibly claim part of the expensive upper Manhattan real estate market. This is not about Cohen building. The 13-story Equinox at the 800 Third Ave. tower, recently erected on the seventh and eighth floors, is designed as a “portal” to its new 1,000-seat theater. By letting him stick around long enough, Cohen stands to benefit and thus might have the financial motive to lower his rent or delay rent increases — which would enable the building’s real estate to increase in value, Mr. Conlon wrote. Cohen, who brought his Equinox business to New York in 2006 and owns more than 50 units in the buildings, has agreed to defer approximately $330,000 in rent this year.
Last year, Powers told a crowd at the Brooklyn Symphony Orchestra that he had been unable to find more than one bedroom in a building downtown that hadn’t been co-owned by Cohen. New York magazine sat down with Powers following the story’s publication and the teacher explained why he and Cohen have not made peace:
The whole thing is maddening and the result is that you don’t get anywhere,” Powers said. “I think Cohen is doing this for leverage, and I don’t think he cares about anything but winning.” Cohen has certainly lived up to that. A spokesman for Cohen and the Buildings Department says that he has been “managing his rent closely,” and the appraiser Robert J. Whitaker says he has been told that the gap between the high end of the rent range and the low end hasn’t occurred in years. If this ends up working in Cohen’s favor, it’s not yet known what it will cost the city. Cohen’s goal, though, is probably to double his base and reserve rent through the first year, according to an appraisal the city paid him. But the raises are based on a few long-term leases, not on the marketing of new units. “The decision by Cohen to get his rent increased is not a reasonable decision,” said Michael Haran, who is the vice president of the United Federation of Teachers. “What happens if there’s an economic downturn? Cohen makes billions. He can afford to take some of that and start a company for those without homes.”
Read the full story here.