Apoplectic at the Apthorp

Walk down Broadway—say, from Zabar’s to 78th Street—and it’s bound to slow your step: a gated, vaulted, three-story-high entrance carved into a block-square Renaissance Revival limestone building, framing an almost paradisiacal glimpse of private courtyard (gatehouse, evergreens, a fountain nymph). A spasm of class envy is unavoidable, more so because the sight is unexpected: Unlike Londoners or Parisians, New Yorkers are not exactly used to peering through lacy front gates into forbidden palisades. Our street grid is supposed to be our great equalizer.

The Apthorp was born to both blend into and defy that grid. Formally divided into four buildings, A through D, it looms in a massive quadrangle around a courtyard the size of a small park, with a circular, cobblestone driveway coiled inside. The building—compound, really—used to be accessible from West End Avenue as well; now, the second gate is permanently shut, and the Broadway arch provides the only public peek into the storied world of the Apthorp.

The uninitiated might expect the building to be populated by a kind of East Coast Who’s Who, and, to an extent, it is: Al Pacino, Conan O’Brien, Cyndi Lauper, Rosie O’Donnell, and 60 Minutes’ Steve Kroft have all lived here, as has Nora Ephron, who wrote about falling in (and then out of) love with the building last year in The New Yorker. At the same time, more than half of the Apthorp’s 163 units are rent-regulated in one way or another. Hence, it’s mostly home to the kind of crowd one associates with the Upper West Side of the postwar, pre–Lincoln Center days: intellectual, lefty, Jewish—New York’s own version of the Greatest Generation. Sophisticated is the word Maurice Mann, the building’s current co-owner, used no fewer than four times, during one conversation, to describe his tenants.

In the cuckoo context of New York’s lotterylike rent laws, sophisticated can also mean cliquish, fiercely self-protective, and litigious. Apthorp tenants openly warred with the building’s previous owner, 390 West End Associates, in one case successfully proving that the landlords had wrongfully wrested apartments out of regulation. A “luxury decontrol” law passed in 1993, which took rental privileges away from those earning $250,000 or more, also picked off a few veterans (including, eventually, Ephron, who made the highly symbolic move across the park). “Market rate” tenants, some paying more than ten times their neighbors’ rent, took the place of the departed. By 2002, the Times was bemoaning the building’s evolution “from comfortable West Side icon to gilded palace for the very, very rich.” That complaint, however, turned out to be premature. To date, only 40 of the units have gone market rate; 79 are stabilized, meaning that their rents can only creep up by a preordained percentage each year, and 17 more are rent-controlled, meaning that their rents are all but frozen from time immemorial. (The remaining 27 are vacant.) Overall, thanks in no small part to its tenants’ tenacity and legal acumen, the Apthorp has stayed gloriously motley—the last of Manhattan’s grand all-rental behemoths.

Up until this year, anyway. On March 7, Africa Israel Investments Ltd., a company on a diamond-fueled New York buying spree, picked up a 50 percent stake in the Apthorp. Its president, enigmatic Israeli multibillionaire Lev Leviev, a newcomer to the New York real-estate game, had announced his entrance with a bang: by purchasing the old Times Building on 42nd Street. Leviev’s rapidly multiplying Stateside interests include a few 7-Elevens in Texas, a massive residential-development plan for Gowanus Canal, and a high-end jewelry store in the works on Madison Avenue. He is also one of the main bankrollers of Chabad, an idiosyncratic subset of Judaism with a Brooklyn headquarters, and pals with Vladimir Putin.

Leviev swooped in on the property a mere three months after its owner, Mann Realty, had purchased it from 390 West End Associates. Unlike Maurice Mann, who claims to have known he was going to own the Apthorp the moment he strode into its magical courtyard last fall, Leviev, who spends only a few days a year in the U.S., bought into the building sight unseen. The original deal was said to preserve the Apthorp’s structure: Mann told the Times outright that he was going to “maintain it as a very high-end rental and to keep it exactly the way it is.” On March 8, one day after Leviev had bought in, The Wall Street Journal reported that the Apthorp—now split 50-50 between Mann and his new partner, with Mann Realty staying on as the building’s manager—would go condo.

With his diamond-derived billions and autocrat friends, Lev Leviev cuts an intimidating figure. “You think you have the worst landlord possible, and then you get this guy,” says one tenant with a nervous laugh. “I mean, I think he was wanted in the Hague!” He wasn’t, but the existence of the rumor says a lot about how wary tenants are of him. Leviev is also, as a recent Times Magazine profile called him, the “Missionary Mogul.” To call him merely active in Jewish charities is to significantly understate matters: His long-term goal is to provide free Orthodox education for every Jewish child in America. His Chabad ties feed fanciful theories that sometimes seem tinged with anti-Semitism. A comment on real-estate blog Curbed.com, for instance, imagines Leviev marketing the Apthorp to Orthodox families and building a temple on the premises. Earlier this month, when the new management prohibited outside personnel from working in the building for the Jewish holidays, some occupants feared this heralded a new, pious regime. Maurice Mann—a landlord with a long and respected history in New York—didn’t fire up the tenants’ imaginations nearly as much. His early reviews from inside the building were mainly positive; for one thing, he had won quite a few hearts and minds by removing two garish alabaster lions that his predecessors had installed at the Broadway arch.

As late as July, Mann and Leviev neither confirmed nor denied the condo rumors. They were “exploring their options.” But residents were on edge, their fears running from massive rent hikes to flat-out evictions, and for some, the worst-case scenario happened almost immediately. Over the spring and summer, as lease after lease expired and got renewed, the building’s market-rate renters saw their rents rise by jaw-dropping sums all across the price spectrum. Apartment 3KS, a two-bedroom, went from $6,000 a month to $14,865. The monthly rate for one five-bedroom went overnight from $24,000 to $35,000. It is rumored that the monthly rent for at least one particularly spacious unit rose to $54,000—an impressive figure even for the rarefied Manhattan luxury-rental market.

Maurice Mann insists there was no intention to price residents out of the building to pave the way for condo sales. “Let’s be very clear,” he says. “No one has to leave.” In Mann’s view, the new market-rent pricing is simply “comparable to similar apartments in similar buildings.” The veracity of this statement hinges on Clintonian parsing of the words comparable and similar. One recurring complaint from ex-tenants is that the Apthorp is not, strictly speaking, a luxury building. Its walls are covered with lead paint, its pipe casings bulge with asbestos. Some units have central air, some don’t. Everyone mentions that the water from the Apthorp’s faucets frequently runs brown. It used to be worse, deadpans one tenant: “You’d turn on the faucet and pigeon feathers would come out.” One by one, the wealthier renters did the math and began throwing in the towel. Steve Kroft—one of the few who could, by neighbors’ gossipy consensus, afford the new rent—gave up and bought elsewhere.

Among those who stayed, paranoia began to set in. Longtime resident Ronald Blumer, the co-chair of the Apthorp Tenant Committee, grew convinced that the management employees were spying on regulated renters, secretly sending a representative to the committee’s meetings. (Mann denies the accusation and shrugs off the committee’s very existence.) Some regulated tenants reported receiving mysterious letters from an entity called AJ Clarke Real Estate Corp. offering “mutually beneficial” arrangements on behalf of the management. At least one tenant says she received a “low-six-figure offer,” since withdrawn, to walk away from her stabilized apartment. Mann says that AJ Clarke is a totally unaffiliated “relocation consultant,” but when I asked John Economou, an AJ Clarke associate, about his firm’s relationship with Mann Realty, he told me that was “privileged information.”

Shortly after Leviev bought in, Maurice Mann spent several weeks in Europe. Even that became grist for the rumor mill. “They said it was a vacation,” muses one tenant. “I say he was marketing to the Europeans.” For weeks, the building buzzed with the news that, right after Mann’s return, two or three Brits moved in.

Finally, with the feverish theorizing nearing Roswell levels, came a bit of clarity. On August 28, all tenants were told to report to the building’s famed front gate to receive their copy of the so-called red herring: an offering plan for a condo conversion.

The distribution of the document was cloaked in secrecy. Before touching the book, tenants had to hand over their driver’s licenses for photocopying. Less than an hour after this procedure was over, Apthorp employees began knocking on doors and repossessing the tomes. By the time the tenants got letters instructing them to pick up their copies at the post office instead, people, one renter says, were spooked into thinking it was a ploy to serve eviction notices.

The conversion plan turned out to be a “non-eviction” one. As its front cover plainly states, “no non-purchasing tenant will be evicted by reason of conversion to condominium ownership.” (This calmed some nerves, but not nearly enough. Once the hush-hush distribution of the red herrings was complete, many tenants sent them directly to their lawyers.) The book, which runs 638 pages and weighs almost four pounds, calls for a pricey reimagining of the Apthorp as the new Dakota: an ultraexclusive enclave of the kind it was seemingly born to be, without the hassles of a co-op board. The pièce de résistance is a list of the prices the owners think they will be able to charge after Apthorp 2.0 hits the market in September 2008. The rent-controlled 2J, for instance, is a 3,368-square-foot four-bedroom priced at $8,450,000; right now, it rents for less than $1,000 a month. The stabilized, five-bedroom 5F, at almost 5,000 square feet, is valued at $12.5 million. The two-bedroom 10F is the home of pop singer Cyndi Lauper, who in 2005 won a landmark lawsuit to roll her rent back from $3,250 when she found out the previous tenant had paid $507.85 (the old owners tried an “illusory tenancy” maneuver, renting to an associate who in turn sublet to Lauper at a market rate). The red herring appraises 10F at $6,150,000. The combined purchase price of the building’s 163 residential units is $893,511,750. This makes the price of the average apartment in the Apthorp a little over $5,481,667—and would more than double Mann’s original investment of $426 million. That is, if every apartment sells. Standing between the owners and their windfall is the fact that, even after several months of raised rents, only 27 of the 163 units are vacant—and 96 are, for all intents and purposes, untouchable. If the landlords are interested in keeping any of the current tenants as owners, however, they’re not doing much to reassure them.

I’ve spoken to two market-rate tenants who are, in fact, thinking about buying once the conversion rolls around. Laurence L. Gottlieb, a ten-year veteran of the Apthorp, runs Fundamental Advisors, a private- equity fund managing distressed debt. He describes his decision in the baldest business terms: “I need to make money, I have to make money, and their plan is to make money. Yes, there is project-execution risk. But I think that, properly managed, the asset will hold its value.” The other tenant, Sam Merrin, is an art dealer who leased a free-market five-bedroom rental on the fourth floor (red-herring price: $10,600,000) a mere four months ago. Is the price fair? “It’s certainly on the top end,” he admits, “but on the other hand, this is a top-end building. Once all the things are put into place, this is going to be that type of building. My daughters can play in the courtyard. I can drive my car right in there! I’m in love with the look of the building. Maybe I shouldn’t be saying that now, but I’m in love with it.”

Most of the current residents, however, don’t view the red-herring quotes as genuine offers to buy in. “To our ears, these prices seem fanciful,” says Ronald Blumer. Other adjectives going around: “insulting” and “insane.” “I simply don’t think there is this kind of money in the building,” tenant Lynn Grossman, the wife of actor Bob Balaban, says, laughing. And while some residents say they plan to wait and see if the management produces some sort of insider discount, Mann and Jon Herbitter, president of Mann Realty, won’t say if anything of the sort is in the cards.

The vast majority of renters are simply afraid they’ll be muscled out (in the case of the rent-regulated tenants) or priced out (in the case of the free-market residents), their rents jacked up by such extreme amounts—double? triple?—that they’ll have no choice but to leave. It’s hard to say how many people have already left the Apthorp since Leviev entered the picture (one can’t separate distressed movers from normal turnover), but a recurring guesstimate, which Mann and Herbitter call far too high, puts that number at about 30.

The condos are being priced as high as $12.5 million. One tenant calls such figures “fanciful.” Other adjectives going around: “insulting” and “insane.”

No one is more spooked than Nancy Robbins is. A theater veteran who was an extra in the Grease movie, she has, for the last 33 years, made her home in the Apthorp’s 720-square-foot Penthouse L with her husband, Michel Dumerchat. (In the upside-down world of the Apthorp, the “penthouses” are the smallest, dingiest units; back when each floor had only ten apartments, they were used as servants’ quarters.) Robbins moved here in 1974, when rent ran $300 a month and prostitutes lined the Broadway sidewalk below. Now, with her rent under $1,000 and her apartment valued at $1,620,000, she says she’s been served an eviction notice. The grounds? Having ants in her planters. Needless to say, Robbins is convinced that the management is trying to kick her out by any means necessary. Mann and Herbitter call her “difficult” and deny putting any undue pressure on her.

When Robbins reluctantly agrees to speak with me, our meeting begins in the lobby of a nearby Chase branch: She’d rather I not announce myself to building security lest Mann somehow find out she’s talking to the press. Thus, my first-ever steps inside the Apthorp have a furtive, cloak-and-dagger air. We silently pass by the guard booth, take a quick right in the fabled courtyard, cross an Italianate lobby, and step into a wood-paneled elevator. For a second, Robbins’s ants-in-planters chatter sounds piped in from another planet; there’s a chandelier in the elevator, for God’s sake. There’s also a friendly elevator attendant. Vestiges of a bygone era, the building’s four elevator guys spend their time zipping between floors, making small talk, collecting and spreading rumors, and delivering mail off a wheeled wooden contraption. Ex-tenant Rosie O’Donnell once got so taken with one attendant, George, that she booked him as a guest on her morning talk show.

The elevator stops, the chandelier clinks. Robbins throws open the door to Penthouse L. A second later, I’m staring at the most horrific water damage I’ve ever seen. “We’ve had leaks here since forever,” says Robbins, gesturing at the destroyed wall and disfigured ceiling. “The old owners supposedly repaired the roof, after which there were major leaks. Then the new owners scraped the walls, after which water began streaming down the walls. I finally called 311. And two weeks later, the building came after me.”

The story of Robbins’s alleged persecution reads likes some uniquely Upper West Side farce. After she decided to fight her eviction notice in court, the management produced a video of several ants crawling around Robbins’s planters. Robbins responded with a video of countless ants in the building’s courtyard. Robbins’s lawyer, Darryl Vernon, who has been representing Apthorp tenants in skirmishes with the old owners for over ten years and won the Cyndi Lauper case, is convinced the issue is really the conversion. Mann insists that Robbins doesn’t properly maintain her apartment.

As a top-floor tenant, Robbins may have special cause for concern. The red herring makes oblique references to the fate of the Apthorp’s roof: “The Building presently includes approximately 50,508 square feet of unused Development Rights and Sponsor is considering the construction of penthouses on the roof of the Building,” reads the section entitled “Special Risks to Be Considered by Purchasers.” The included property description by Design Profile Inc., an architecture consulting firm, is even more cryptic: “According to the management the replacement of the entire roof with new is seriously in the agenda.” Another top-floor tenant, who rents at market rate, says Herbitter “made it very clear” her options were to buy in or get out once her two-year lease is up next April. I asked Mann and Herbitter what their designs on the Apthorp roof were. Mann’s answer would hardly comfort Robbins: “We’re exploring options. Nothing has been finalized. They can read what they want into that.” The elevator guy had his own take. “They’re gonna put a pool on the roof,” he informed me, and cracked up.

What will happen to the Apthorp? Mann claims that “everything will be handled legally and properly,” but it’s hard not to foresee the same scenario we’ve watched play out in Manhattan time and again—if never on quite such a grand stage. When a new landlord buys a rental building and turns it condo, longtime tenants tend to get nudged out, be it through perfectly legal rent hikes, decontrol, or good old-fashioned intimidation. Hand-wringing about the disappearing “community character” normally ensues.

Does anything in this equation change if the building in question is full of well-heeled, lawyered-up residents? Probably not. The new owners are even better heeled, and determined, one can safely say, to make their investment pay off. Besides, the value of a property—sentimental notions of scruffy Upper West Side havens aside—is, like it or not, whatever the market will bear. This is New York. Who’s to say someone won’t pay $100,000 one day to rent in the Apthorp? Or lay out $20 million to purchase a condo there?

Even the current tenants, hopeful as they are, seem to have a sense of where this story is headed. “Everyone has a feeling we’re in Act One,” says Lynn Grossman. “I just hope it ends better than Titus Andronicus.”

Apoplectic at the Apthorp