Corcoran May Sue Over Penthouse Sale to Rap Star

 by Barry Owens and Carl Glassman

When rap impresario Jay-Z walked away from his offer on a penthouse at 195 Hudson St. in 2002, some residents in the building sighed in relief that they would not be counting the celebrity and his entourage as neighbors.

Rap artist Jay-Z, reportedly in contract to buy Peter Arnell's penthouse at 195 Hudson St. for $7.15 million. Photo: Allan Tannenbaum

The co-op board's president had gone so far as to post news articles in the building's halls and elevators about the rapper's criminal record to rally residents against the purchase. The ploy worked (though it brought them a $10 million lawsuit from the unit's owner), Jay-Z shied away, and the penthouse has sat empty for two years.

But now Jay-Z has returned with another offer, and trouble of a different sort is afoot.

Damon Dash, co-founder with Jay-Z of Roc-A-Fella Records, the rapper's label, was reportedly only days away from signing a deal on the $7.5 million apartment when the unit's owner, adman Peter Arnell, informed his broker that he'd found another buyer. That buyer, as it turned out, was Shawn Carter, aka Jay-Z.

"Damon was shocked," said Wilbur Gonzalez, the Corcoran broker who has represented both rap moguls in several Tribeca real estate deals.

But perhaps not as shocked as Gonzalez, who said his company will sue Arnell. Gonzalez claimed that Arnell struck the deal with Jay-Z behind the broker's back to avoid paying the six percent commission on the sale, or about $500,000.

"It's really bizarre," said Gonzalez. "I have no idea what Arnell's motivation is. For someone that wealthy I just don't understand."

Neither Dash nor Arnell returned messages left by the Trib.

"Jay's not always on top of whose doing what," Gonzalez said when asked why the rapper would make a play for the penthouse if he knew Dash was expecting to buy the property. "He lets his business manager handle those things."

"Jay's not really involved," said a close associate to the rapper who did not want to be identified. Asked if the deal had been done behind Dash's back, the associate said, "I don't know whether that's accurate. Jay entered into an agreement with Peter Arnell. I don't know whether [Dash] had a signed contract or not."

The associate dismissed any notion that the deal signaled a falling out between the long-time friends and business partners.

"I think this broker is trying to use their celebrity to get some kind of settlement," he said. "They're friends and they have no issue between them."

When Jay-Z first walked away from his offer to purchase the 10,000- square-foot penthouse-which also features 4,000 square feet of outdoor terrace space-Arnell's wife, Sara, sued the two residents who had warned others in the building about their prospective neighbor.

In a failed 2002 suit against condo president Lynn Fisher Hill and Lewis Taffer, Sara Arnell sought $10 million in damages, alleging that the pair, driven by a "not-in-my-backyard sentiment," had wrongfully conspired to turn residents against Jay-Z. The flyers they posted highlighted the rapper's "criminal record and lifestyle of knives, guns and violence."

Jay-Z pleaded guilty in 2000 to stabbing a record label executive in a dispute over bootlegged music. He was sentenced to three years probation.
Arnell, who may be sued for making the deal. Photo: courtesy Advertising Age
Peter Arnell's 10,000-square-foot penthouse atop this building at 195 Hudson St. is the focus of controversy.
Hill declined to comment on Jay-Z's impending purchase.

Gonzalez said he offered the penthouse to Jay-Z a second time, and when the rapper passed on it, he showed it to Dash, who recently listed his duplex at 25 North Moore St. for $5.5 million. Dash also owns a fifth-floor loft at 79 Laight St. as an investment property.

"Ultimately, it's a size issue," Gonzalez said about the rap moguls' taste for Tribeca. "It's where you get the most bang for your buck."

Dash was in contract talks for the penthouse when Jay-Z swooped in. "We were floored," said Gonzalez.

One building resident, who did not want to be identified, said she was comfortable with Jay-Z as a person, but that his star status worried her.
"You don't want a celebrity in your building," she said. "It just brings a crowd. I think people don't want to come home to a circus."

Not that life in the building has always been the picture of serenity. Poor ventilation, fireplaces that can't be lit, and cracking and leaking windows, among other troubles, have led the condominium board to sue the developer, Steve Blumenthal, as well as the architect, the building engineers and the construction manager. The board's claims include breach of contract and fraud and they are seeking $5 million in damages to cover repairs. The state attorney general's office had brokered a deal under which the developer would have paid the condo board $1.5 million for some of the repairs, but those talks stalled when Arnell, according to one source, refused the settlement.

"I don't know why he'd want to live here," a resident said of Jay-Z. "There are so many legal problems."
Damon Dash. Photo: Allan Tannenbaum