Things are getting tense at the Pierre Hotel. In a suit filed Wednesday by designer Tory Burch and a few other wealthy residents, a contentious and, per the complaint, secretive deal to sell the building and evict them has begun. “The sale process is underway,” a source close to the situation tells me.
To catch you up: The Pierre is a storied hotel on the Upper East Side with co-op residences — and they are fancy (the building’s neo-Georgian design was inspired by the Palace of Versailles, and the residents enjoy the same perks as hotel guests, including daily housekeeping and room service and other amenities). Plenty of rich and famous people have kept apartments there, among them Disney’s Michael Eisner and Paul Simon’s son, Harper. So this is not your usual story of a building being sold out from under its residents’ noses; rather, it’s that but for people who can afford tens of thousands of dollars in monthly maintenance fees alone.
The suit, filed in Manhattan Supreme Court, asks a judge to force the co-op’s board of directors to turn over its books and records. And the details are juicy: At a September 17 shareholder meeting, the suit alleges, the board revealed it had a few days earlier signed a term sheet for a $2 billion sale with an LLC believed to be owned by an affiliate of the Khashoggi family. Per the suit, the term sheet stated that the building would become part of the Dorchester Collection, a luxury-hotel group owned by Brunei, and that the residents would have to leave their apartments within a year after the sale’s completion or else “forfeit their share of the proceeds.”
There’s more: According to the suit, the board not only “admitted that it did not know who the Purchaser was” or whether it actually could finance the purchase, but it also, the residents allege, rebuffed a competing offer from Taj Hotels, which has operated the building since 2005. The suit goes on to claim that the Indian luxury-hotel chain offered “substantial” building renovations and, importantly, allowed residents to remain in their homes. “The Board has refused to provide the most basic information about the mystery buyer and the status of negotiations, declining to even provide a copy of an exclusivity agreement it signed with the proposed buyer or confirm when that agreement was signed,” per the suit. “This course of conduct is fundamentally at odds with Board members’ fiduciary obligations.” (Since the shareholder meeting, the board has insisted the term sheet is, in fact, “non-binding and subject to shareholder approval,” per the suit.)
So why is the Pierre for sale? According to the New York Times, the hotel apparently isn’t in the best shape; by 2023, “its stately carpets were fraying, the elevators were breaking down, and the front desk often stood empty.” (One resident reportedly had a conniption when she couldn’t get change for a $100 bill at the front desk.) According to the paper, Howard Lutnick, Donald Trump’s Commerce secretary who owns the co-op’s penthouse, played a significant role in swaying the board to sell. He reportedly urged the board to hire a new manager, and it wound up tapping the real-estate firm Newmark Group — Lutnick was its CEO at the time — for guidance to help improve the property before eventually pivoting to selling the hotel.
It’s been quite a fight ever since. The board, per the suit, may “hope that by keeping a tight lid on the sale process, they can ram a sale through by presenting it as a fait accompli to shareholders.” Not on Tory Burch’s watch.