Related's Jeff Blau says "Pay Your Rent!" (Or we might go broke)

David Goldsmith

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Related’s Blau on tenants with cash: “It’s their obligation to pay”
CEO says some well-heeled companies are not ponying up

With a $97 billion real estate portfolio, Related Companies faced a reckoning this month.
But after bracing for a major loss of rental income, Related CEO Jeff Blau said “the results have been pretty good so far.

In an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box,” Blau said commercial and residential tenants are by and large paying rent this month. Retailers, however, are another story.
Just a few days into April, 88 percent of Related’s residential tenants and 95 percent of its commercial tenants have paid their monthly rent, Blau said. The company’s hotels are closed, and so far only 26 percent of its retail tenants have paid.
The CEO called out tenants who have the resources to pay rent but are not. Those “that have capability, have liquidity, have a strong balance sheet” should pay, Blau said. He pointed to sportswear retailer Adidas, which sent a letter to all its landlords in Germany saying it would not pay rent. Blau said the company was publicly shamed for the move and ultimately paid up.In an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box,” Blau said commercial and residential tenants are by and large paying rent this month. Retailers, however, are another story.
Just a few days into April, 88 percent of Related’s residential tenants and 95 percent of its commercial tenants have paid their monthly rent, Blau said. The company’s hotels are closed, and so far only 26 percent of its retail tenants have paid.
The CEO called out tenants who have the resources to pay rent but are not. Those “that have capability, have liquidity, have a strong balance sheet” should pay, Blau said. He pointed to sportswear retailer Adidas, which sent a letter to all its landlords in Germany saying it would not pay rent. Blau said the company was publicly shamed for the move and ultimately paid up.

“I think that’s what we have to be careful of today. This is not an excuse for people to not pay rent,” he said. “They have the capacity. This is society’s issue — everybody’s going to get hurt a little bit.”
Related has a mix of startup companies and restaurants reeling from forced closures. Blau said the company is going to work with tenants who need help “to figure out a payment plan or whatever needs to get done.”
“It’s a whole ecosystem. The people that can pay need to pay,” he said. “Landlords need to help out those that can’t. And then the banks need to help out the landlords that are hurt by people who couldn’t pay the rent.”
 

David Goldsmith

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This seems ironic:

Equinox isn’t paying rent at multiple NYC locations
Fitness chain’s parent, Related Companies, this week said tenants with cash must pay

Among the many businesses not paying rent is Equinox, despite Related Companies’ CEO saying this week that commercial tenants must pay if they can afford it. Related’s principals are Equinox owners.

The gym chain has not paid rent for the month of April at multiple New York City locations, The Real Deal has learned from documents and three sources with direct knowledge.

Equinox’s failure to pay raises questions about its financial health and it comes as the company’s parent, Related Companies, takes a strong stance against commercial tenants not paying rent.

“Companies that have capability, have liquidity, have a strong balance sheet — I think they need to pay the rent,” CEO Jeff Blau said on CNBC’s “Squawk Box.” “What’s not okay is when you have large companies, whether it’s retail or corporate, that suddenly send blanket letters to their landlords saying ‘we’re not going to pay the rent.’”

“It’s a whole ecosystem,” he added in the interview. “The people that can pay need to pay.” Landlords should work with tenants who can’t, he noted.

Related acquired Equinox in 2005. The upscale fitness chain has locations in Related’s Hudson Yards and one of Related’s condo buildings with Taconic Investment Partners in Chelsea at 450 West 17th Street.
Jon Weinstein, a spokesperson for Related, said in a statement, “Equinox is an independent company, with multiple investors and we don’t make strategic or operational decisions for them.”
“We don’t comment on individual tenant rent collections or their financial situations,” he continued.

Principals of Related are among the owners of Equinox, whose representatives did not respond to requests for comment.
Non-essential businesses, including commercial gyms and even fitness facilities in residential buildings, have been ordered to close by Gov. Andrew Cuomo to slow the spread of the coronavirus.
But as health and government officials try to bring the virus under control, many businesses have been hemorrhaging cash, notably retailers, hotels and restaurants.
 

David Goldsmith

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75% of the stores in NYC's most expensive neighborhood — the $25 billion Hudson Yards — didn't pay their April rent

75% of the retailers in New York City's Hudson Yards neighborhood refused to pay their April rent because of the coronavirus crisis, The Financial Times reported.

The neighborhood's developer, Related Companies, is investigating its tenants who didn't pay rent, estimating that half of its Hudson Yards retailers have adequate financial resources to pay, according to the Times.

Hudson Yards, the $25 billion megadevelopment in western Manhattan that opened in March 2019, has become the city's most expensive neighborhood, with a median sale price of nearly $5 million. It's home to luxury condos, office towers, a performing arts center, and a 150-foot climbable sculpture. At its core is the Shops & Restaurants at Hudson Yards, a seven-story luxury shopping center that houses more than 100 retailers, including Neiman Marcus, Louis Vuitton, Cartier, Uniqlo, and Zara, as well as 25 cafés and restaurants.

The shopping center has been closed to the public since March 17.

Businesses in New York City and across the country have been forced to shut down because of the pandemic, which could result in a surge of bankruptcies and permanent store closings, as Business Insider's Hayley Peterson recently reported.

The Times report did not specify which Hudson Yards retailers haven't paid rent, and Related did not respond to Business Insider's request for comment. Most of the retailers Business Insider reached out to, including Neiman Marcus, Dior, Chanel, Stuart Weitzman, Kate Spade, Madewell, Uniqlo and Zara, did not respond to requests for comment for this story.

Others, including Rolex and Louis Vuitton, declined to comment.

A spokesperson for athletic apparel retailer Lululemon pointed to a CNBC interview from last week in which CEO Calvin McDonald said the company had paid April rent to all its landlords.

Related CEO Jeff Blau told the Times that many of the retailers who didn't pay were large companies with adequate financial resources. He said Related has its own taxes, wage bills, and debt interest to pay, adding that "no landlord can survive with zero rent forever."
 

David Goldsmith

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Related’s Stephen Ross, Trump Crony, Has a Giant Coronavirus Hypocrisy Problem
Even as Related’s Equinox is not paying its rent, Related is dunning its own tenants, Ross is sitting on a giant new Saudi investment—and Trump continues to make decisions that benefit the developer.

On April 6, Jeff Blau, the CEO of Related Companies, the behemoth real estate developer, appeared on CNBC’s Squawk Box with Andrew Ross Sorkin to discuss the challenges Related’s retail tenants had in early April making their rent payments because of the coronavirus lockdowns.
Related, one of Manhattan’s largest real estate developers, once described as “the Harvard of real estate,” owns the swanky new $25 billion Hudson Yards development on Manhattan’s West Side and the Time Warner Center at Columbus Circle. Related is also one of the largest owners of affordable housing in the United States. In sum, according to Blau, Related controls a real estate portfolio worth just shy of $100 billion.
Stephen Ross, a longtime friend of Donald Trump’s, with an estimated net worth approaching $10 billion, according to Forbes, is the founder of Related. Ross, a tax attorney who was fired from his job at Bear Stearns in 1970, also owns 95% of the Miami Dolphins football team, controls a $5 billion investment fund, and is the largest donor—more than $350 million—to his alma mater, the University of Michigan, where the business school bears his name. The Financial Times reported in 2017 that Ross owns “more than half” of Related.

In his appearance on CNBC, Blau told Sorkin that 88% of Related residential tenants had paid their April rent, that 95% of its commercial tenants had paid the April rent, but that only 26% of Related’s retail tenants had paid the April rent. He then went off on a bit of a rant about how it was not okay for tenants not to pay rent or to write “blanket letters” to landlords, such as Related, about why they would not be paying their rent because of the coronavirus lockdowns. He said he would not accept excuses about not paying rent from tenants who were well capitalized. He then talked about how Adidas, the big athleticwear company, had suffered “public shaming” in Germany after it wrote some landlords initially that it would not pay its rent because of forced store closing, due to the spreading virus. “It’s a whole ecosystem,” Blau said. “The people that can pay need to pay. Landlords need to help out those that can’t, and then the banks need to help out those landlords that are hurt by people that couldn’t pay the rent.”

Ah, the hypocrisy. Soon after Blau’s CNBC appearance, the Financial Times, among others, reported that Equinox, the high-end health club with more 300 locations globally, would not be paying April rent. Equinox is—wait for it—owned by Related Companies, which it bought for around $500 million in 2005 and then, years later, sold minority stakes to outside investors. Equinox has a new, luxury hotel at Hudson Yards—the first of several hotels planned for Houston, Los Angeles, and Chicago in the coming years—and a swishy health club there. Equinox also owns SoulCycle, Blink Fitness (a health club designed for the non-triathlete crowd), Pure Yoga, and Precision Run, an interactive exercise experience. Not only would Equinox not be paying its rent, it also wrote letters to vendors according to Fortune, on March 18, telling them it would not be making “invoice payments until further notice.”


But there’s even more hypocrisy. In the first week of February—at virtually the top of the market—Ross, Blau, and Related Companies closed on a major capital investment into the Related Companies from Saudi Arabia’s sovereign wealth fund. The Saudis $320 billion Public Investment Fund, known as PIF, is chaired by Crown Prince Mohammed bin Salman, another Trump confidant and the man many believe is responsible for the shameless 2018 killing of journalist Jamal Khashoggi. Related is a private company and PIF is a private investment fund; neither is obligated to comment publicly on the investment—which has not previously been reported; Blau did not mention it during his CNBC appearance—and neither organization would comment to me on the record. A spokesman for the Related Companies declined to comment on the PIF investment and Kevin Foster, PIF’s New York–based head of communications, did not respond to a request for comment about the investment in Related.

But people familiar with the investment confirmed to me that it was in the form of convertible debt, convertible into 15% of the equity of Related and that it will be used for “general corporate purposes.” I could not learn how much the Saudis invested in Related in exchange for its 15% stake in the company, or at what the value the Saudis agreed to place on Related when it made the investment. But it’s likely that the PIF invested hundreds of millions of dollars into Related given that the deal closed at the top of the market and that Related itself is likely worth tens of billions of dollars, based on Ross’s net worth and his majority stake in the company. PIF has been on a tear in recent weeks, making investments in a variety of companies that seem to be in distressed straits, due to the coronavirus. PIF has recently agreed to invest in Carnival Cruise, and a bunch of oil companies including Royal Dutch Shell, Total, Repsol, Equinor, and Eni. According to the Financial Times, it also recently agreed to buy Newcastle United F.C., the British soccer team, for around $375 million.
 

David Goldsmith

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Ross has known Trump for more than 40 years. He ran into serious flak last summer when he hosted a multimillion-dollar fundraiser for Trump in the Hamptons, charging as much as $250,000 a pop to have a picture taken with Trump and to participate in a conversation with him. Many Equinox and SoulCycle members publicly complained about Ross’s Trump fundraiser and threatened to cancel their memberships. As I reported last August, many on Wall Street concluded that Ross’s real motivation for holding the fundraiser was to insure the controversial EB-5 visa program, which allows rich foreigners to get a permanent visa in exchange for making an investment of at least $500,000 in an American business, got extended rather than expire at it was supposed to do at the end of September 2019. Ross succeeded in his mission; Trump signed a law extending the program for a year, until September 2020. Ross’s Related Companies is one of the bigger users of the EB-5 program to raise cheap equity.

And Ross got more public flak when it was revealed, by the Daily Beast, that after Ross participated in a conference call Trump had with business executives, Trump decided to include gyms on the list of businesses that can open first during “phase one” of Trump’s controversial efforts to re-open the economy. In Trump’s memo, “Guidelines for Opening Up America Again,” the president wrote that as long as gyms “adhere to strict physical distancing and sanitation protocols,” they could reopen. The Daily Beast quoted an incredulous Laurence Gostin, the director of the O’Neill Institute for National and Global Health Law at Georgetown University, “Gyms are like a petri dish. People are close to one another, they’re sweating, they’re coughing and sneezing, they’re touching multiple surfaces, they’re sharing equipment, they’re indoors. Literally all of the heightened risk factors for COVID transmission are all entwined together in a gym.”

News that Trump seemed to be favoring his friend Ross, and his struggling health club empire, is no surprise of course, given Trump’s eagerness to reward his rich friends. But it still lit up the Twitterverse. Tweeted Frank Rich, the New York magazine writer and Hollywood showrunner, about Ross, “This Trump crony also owns @_HudsonYardsNYC. How long till we learn he got a bailout?” Probably not for awhile Frank, given the major cash infusion that Ross just got from the Saudis.
 

David Goldsmith

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My single biggest takeaway on this story is don't trust any reporting from Erin Hudson when it comes to stories on Related because she conspicuously leaves them out when everyone knows what's going on.


Retailers exposed: Who’s paying rent and who’s not
The Gap, Barnes & Noble, Nordstrom, H&M and Foot Locker haven’t paid

As commercial landlords receive requests for rent relief, discerning whether the call for help is driven by hardship or strategy has been weighing on many.

A new report titled “Who’s paying rent and who’s not” provides some insight.

It documents which national retail and restaurant chains paid rent and costs related to triple-net leases to landlords so far this month. Out of the 118 chains included, 16 percent are not paying at all as of April 17.

The findings were produced by data firm Datex Property Solutions based on verified payment information entered into its system by its clients, which include retail, office and multifamily owners and portfolio managers that oversee thousands of properties around the country. The 118 chains pay a minimum gross rent of $250,000 for at least 10 stores.

Though Mark Sigal, CEO of Datex, declined to comment on the firm’s clients, the company website includes among them Vestar, Weitzman, investment firm Brixton Capital, Devonshire REIT and Lewis Retail Centers.

Datex noted that based on information received from all its clients, national tenants paid 53 percent of billed rent costs so far this month, compared to 87 percent paid by this time last month. Rent collections from retailers without a national footprint were lower. Those tenants paid 47 percent of rent, down from 81 percent in March.

Of the 118 retailers broken out individually, 19 chains that have yet to pay any rent or other costs associated with triple-net leases in April, according to the report.

A substantial portion of the non-payers include clothing and apparel chains such as Foot Locker, H&M, Old Navy, Nordstrom, LOFT and The Gap. There’s also sports bar and restaurant Dave & Buster’s, Barnes & Noble, home decor chain Kirkland’s, LA Fitness and Party City.
Four of the companies are movie-theater chains: AMC Theaters, Cinepolis, Harkins Theaters and Regal Cinemas.
Other companies are paying a fraction of their monthly overhead. Dick’s Sporting Goods, Panera Bread, Supercuts and 24 Fitness fall into that category.

Chains still paying include banks, grocery stores, pharmacies and big-box and anchor tenants such as Home Goods, Marshalls, Lowes, JCPenney, Dollar Tree Stores, Walmart and Best Buy.

The report largely reflects what’s been reported to date about which retailers are maintaining strong sales compared to those businesses that have taken big hits, such as fitness centers, dine-in restaurants and clothing and apparel stores.

Sigal said the report also reveals which chains are bucking the trends within its sector of the market. He said that it could be a sign of a company that already had a distressed balance sheet heading into the pandemic, or it may indicate a strategic decision to not pay rent.
(More)
 

David Goldsmith

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Neiman Marcus bankruptcy could spell doom for Hudson Yards
Retailer’s collapse would open the door for other stores to renegotiate or exit leases

The anticipated bankruptcy of Neiman Marcus could throw Related and Oxford Properties’ Hudson Yards mall into peril.

The parent company of the department-store chain is reportedly planning to file for bankruptcy protection within the week. The move would put Related and Oxford Properties in the precarious position of possibly having to renegotiate the retailer’s lease at the luxury Hudson Yards mall — and enter into conversations with other retailers whose lease agreements are tied to Neiman’s presence.

“Losing Neiman would be a major setback for the Hudson Yards project,” Matthew Seigel of Lantern Real Estate told Business Insider. “Right now, Neiman has the leverage and the landlords are in the less enviable position.”

The retailer came into the project on extremely favorable terms: According to the publication, Related and Oxford footed most of the bill for building the store’s interior, and reached an agreement to take 5 percent of sales instead of rent in the initial three years, and 8 percent in the following two years. The parties were reportedly planning to enter into a traditional rent arrangement starting in the sixth year of the lease.

The brand was considered such a significant selling point that several other stores in the mall reached agreements in their leases that allowed for rent discounts or lease exits if Neiman were to go and an equal replacement was not found — meaning the stakes are even higher in the current climate.

Neiman’s stores are closed at the moment because of the pandemic. The company is hoping to restructure its $4.7 billion debt load and reopen most of its stores after the crisis subsides.
Many retailers were struggling long before the global health crisis, thanks to pressure from e-commerce and changing consumer habits. Department stores have not been immune: Barneys filed for bankruptcy last year. In February, Macy’s announced it would close 125 stores over the next three years.
 

David Goldsmith

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And here it is! Neiman Marcus files for bankruptcy. Condo sales are in the toilet. Restaurants are closed. Hotels a disaster. High end office space is very likely to be hit hard. Could Hudson Yards do to Related what Canary Wharf did to Olympia & York (like I predicted a couple of years ago)?


Neiman Marcus files for bankruptcy, casting uncertainty over Hudson Yards
Department store chain said “mass store closings are not a part of the bankruptcy filing”

Neiman Marcus has filed for bankruptcy, a move that could have major implications for Related Companies’ luxury Hudson Yards mall.
The department store chain filed for Chapter 11 protection Thursday in the U.S. Bankruptcy Court for the Southern District of Texas, following weeks of speculation about the debt-laden retailer’s future.
In a statement released by the company, Geoffroy van Raemdonck, Neiman Marcus’ chairman and CEO, said the coronavirus pandemic had triggered the filing.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” he said.
The company has secured $675 million in financing from creditors to fund operations during bankruptcy proceedings, the statement said. Creditors have also agreed to a $750 million package to create more liquidity, with a goal to emerge from bankruptcy by fall. The company is aiming to eliminate about $4 billion of debt, and its creditors will become the majority owners of the company. Before the filing, some investors opposed to the bankruptcy had been pushing for a sale.

The announcement is a potential blow for Related and Oxford Properties, who announced in 2014 that Neiman Marcus would anchor its luxury mall at Hudson Yards, with the department store taking up 250,000 square feet on the upper levels — a figure later dropped to 190,000 square feet. The developers reportedly covered most of the cost for the store’s interior to be built, and agreed to an arrangement that involved Neiman Marcus paying a portion of sales in exchange for rent.

A representative for Neiman Marcus said in a statement that “mass store closings are not a part of the bankruptcy filing,” adding that “If there were to be future store closings it would be an operational decision on a case by case basis.” Related Companies did not immediately respond to a request for comment.
While the loss of a major anchor tenant could trigger an exodus of smaller tenants in a mall or shopping center, it could depend on the individual leases tenants have with their landlords, said Michael Sirota, bankruptcy attorney at Cole Schotz who is representing Modell’s Sporting Goods in its case. (Sirota declined to discuss Neiman Marcus but agreed to discuss retail leasing generally.)

Several smaller tenants inside the Hudson Yards mall had negotiated lease arrangements with rent discounts or even exit clauses if the anchor brand left and no equal replacement was found, according to a recent report from Business Insider. Finding such a tenant would be a difficult ask in the current climate.
Though during a pandemic, nearly everyone is looking for relief.
“In today’s world, every and any tenant is going to look for a reason to exit or to negotiate,” Sirota said.

The retail sector was already struggling before the pandemic, as consumer habits changed and department stores started to fall out of favor.

Now, with the virus shutting down much of the economy, the weakened sector has been hit especially hard. Nationwide store closures have led to millions of layoffs.

The nature of retail bankruptcies also has been shifting, with retailers asking to suspend their cases because of coronavirus-related uncertainties and for rent relief from landlords — often their largest unsecured creditors.

Neiman is the second luxury department store chain to file for bankruptcy in less than a year. Barneys New York suffered the same fate in August and was sold in the fall to Authentic Brands Group, which said it planned to close all Barneys locations and reduce the size of the flagship store on Madison Avenue.

Before the pandemic, industry experts were watching what would happen to other department stores and big-box retailers like JCPenney and Macy’s.

JCPenney, which has been struggling in recent years with lagging sales, skipped an interest payment in April, raising questions about whether it, too, might file for bankruptcy. And in February, Macy’s announced a restructuring plan, which called for shuttering its worst-performing stores and capitalizing on a plan to build a skyscraper over its iconic Herald Square store.

Soozan Baxter, a landlord consultant who worked on the retail leasing team for Related from 2015 to 2017, said in an interview last month that having Neiman Marcus at Hudson Yards “set the tone for what Related was trying to present not just Manhattan, but the whole world.”

“By getting them to go on the upper three levels of the project and really creating a very forward-thinking design and collection of merchandise … they were really trying to say, ‘This is going to be a beautifully curated, well-thought-out project,’” she said.

A little over a year after the mall’s opening, that vision could be in peril.
 

David Goldsmith

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Brookfield Property’s Q1 losses come as retail tenants miss payments
CEO Brian Kingston said company is negotiating with nearly 2.5K tenants, including those seeking deferrals and abatements

Brookfield Property Partners is now negotiating with 2,400 of its retail tenants across the country who have been unable to come up with the rent. That inability to pay has cut deeply into Brookfield’s bottom line.
Its first quarter was dismal.
The real estate wing of the Canadian giant Brookfield Asset Management had a net loss of $373 million from January through March, compared with $713 million in net income over the same period last year.
The earnings report comes as credit rating agencies consider downgrading its retail real estate investment trust, which has $1.7 billion in debt coming due this year.
“We’re in active dialogue with all of our tenants,” BPP chief executive Brian Kingston said during the Friday earnings call with investors, referring to tenants who have been unable to pay. He said the discussions involve retailers who have requested deferrals and abatements.
It stood in contrast to the company’s fourth quarter earnings call in early February, when Kingston sounded an upbeat note for the year ahead. “Our expectation is that 2019 was the peak for bankruptcies and 2020 will get a little better,” he said at the time, as the company reported net income of $1.5 billion from October through December, compared to $858 million for the same period in 2018.

Now, as states begin reopening their economies, it remains to be seen which retailers will be able to bounce back and adapt to the new retail landscape.
But Brookfield also appears to see opportunities amid the distress. Brookfield Asset Management this week said it was looking to invest $5 billion in retail companies hit hard by the pandemic, the Wall Street Journal reported. The company will target brands whose revenues exceeded $250 million before the virus took full effect in March.

“Retailers with weak balance sheets or weak business models will restructure,” Kingston told investors, referring to high-profile retail bankruptcies that have recently unfolded, such as J. Crew and Neiman Marcus. In February, a bankruptcy judge approved Brookfield Property, Simon Property Group and Authentic Brands Group’s $81 million acquisition of Forever 21.Brookfield and Simon were two of the fast-fashion retailer’s landlords and unsecured creditors.
“Weak retail real estate that is poorly located, that might have been able to hang around for longer, will quickly see values diminish and something different happen with it,” he said. “And that’s a good and bad thing.”
 

David Goldsmith

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Thor Equities tells The Wing to pay up.
Thor clips The Wing for overdue rent
Women-focused co-working space is one of many commercial tenants behind on payments

Thor Equities is suing The Wing for late rent at its Bryant Park office.
Joe Sitt’s firm is seeking $270,000 in rent and other charges, which the women-focused co-working company has allegedly failed to pay since March, Commercial Observer reported.
The Wing, once owned by WeWork, secured its fourth location last year, signing a 10-year lease last year for 12,000 square feet on the 11th floor of Thor’s 25 West 39th Street.

The complaint marks another setback for The Wing, which has been hit hard by the pandemic as well as internal strife that forced CEO Audrey Gelman to resign.
The company said its revenue dropped 95 percent since the onset of the pandemic. As a result, it said it laid off almost all employees responsible for upkeep of its spaces, as well as more than half of its headquarters staff.

After an “Office of the CEO” was established to replace Gelman, 41 current and former employees asked for her to leave the company’s board and for co-founder Lauren Kassan to resign as COO.
Many landlords have filed suits against commercial tenants who have not paid rent since the onset of the pandemic. While the city has sought to protect tenants who have been unable to pay rent, landlords have challenged the city’s protections.
 

David Goldsmith

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“Little bit of guilt trip”: Jeff Blau joins landlords pushing return to work
Related’s Jeff Blau, RXR’s Scott Rechler among those reportedly pushing CEOs to return to offices

For some New York landlords, enough is enough.
Eager to get the city back to its former self, a group of property owners and operators have been calling major employers in an effort to convince them to speed up their return to work, according to Bloomberg.
“I’ve been really pushing the CEOs to bring people back into the office,” Jeff Blau, CEO of Related Companies, told Bloomberg. “I’ve been using a little bit of guilt trip and a little bit of coaxing.”

The motivation is clear: landlords are losing huge amounts of money as tenants fall behind on rent, abandon leases or leave sites altogether. Blau’s Related is marketing more than 300,000 square feet of office space at its Hudson Yards mall after Neiman Marcus announced its departure last month. The critical question: Is there demand?

There have been some positive signs. In the past two weeks, Amazon and Facebook made major commitments to New York’s office market. And in May, TikTok inked an office lease with the Durst Organization for 232,000 square feet at One Five One.

But employees remain mostly at home. Just 8 percent of employees at major companies in the city have returned to work — with real estate standing out as the exception — according to a recent survey by the Partnership for New York City, a leading business group.

The group of landlords, which reportedly includes RXR Realty’s Scott Rechler and Rudin Management’s William Rudin, has contacted a slew of heavyweights including Goldman Sachs, Blackstone and BlackRock, using the argument that a return to work is safe — even patriotic.

“We’re creating our own fate by not bringing people back and restarting the largest economic engine in the country,” Rechler told Bloomberg.
“It’s as much of a civic obligation as anything else.”
 

David Goldsmith

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“Little bit of guilt trip”: Jeff Blau joins landlords pushing return to work
Related’s Jeff Blau, RXR’s Scott Rechler among those reportedly pushing CEOs to return to offices

For some New York landlords, enough is enough.
Eager to get the city back to its former self, a group of property owners and operators have been calling major employers in an effort to convince them to speed up their return to work, according to Bloomberg.

“I’ve been really pushing the CEOs to bring people back into the office,” Jeff Blau, CEO of Related Companies, told Bloomberg. “I’ve been using a little bit of guilt trip and a little bit of coaxing.”

The motivation is clear: landlords are losing huge amounts of money as tenants fall behind on rent, abandon leases or leave sites altogether. Blau’s Related is marketing more than 300,000 square feet of office space at its Hudson Yards mall after Neiman Marcus announced its departure last month. The critical question: Is there demand?

There have been some positive signs. In the past two weeks, Amazon and Facebook made major commitments to New York’s office market. And in May, TikTok inked an office lease with the Durst Organization for 232,000 square feet at One Five One.
But employees remain mostly at home. Just 8 percent of employees at major companies in the city have returned to work — with real estate standing out as the exception — according to a recent survey by the Partnership for New York City, a leading business group.

The group of landlords, which reportedly includes RXR Realty’s Scott Rechler and Rudin Management’s William Rudin, has contacted a slew of heavyweights including Goldman Sachs, Blackstone and BlackRock, using the argument that a return to work is safe — even patriotic.

“We’re creating our own fate by not bringing people back and restarting the largest economic engine in the country,” Rechler told Bloomberg.
“It’s as much of a civic obligation as anything else.”
 
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