The immersive theater production “Sleep No More” is fighting back against its landlord, accusing the real estate firm of trying to destroy the show to cover up its own financial problems.
The production operates out of Chelsea’s McKittrick Hotel, at 530-542 W. 27th St., and Midtown-based landlord Centaur Properties sued it in March to kick it out of the building. Centaur argued that “Sleep No More” was endangering the lives of its guests by operating without a public assembly permit, which covers safety issues such as fire prevention and seating plans.
But that lawsuit was just part of Centaur’s “pattern of fraud and unethical practices which now threaten to crater a successful creative enterprise in the name of greed,” “Sleep No More” argued in its own lawsuit, filed Tuesday in Manhattan state Supreme Court.
“Sleep No More” has operated out of the McKittrick Hotel since 2010, and Centaur had the business amend its lease two years ago, the suit claims. Centaur “was on the cusp of financial ruin” at the time as it tried to refinance its mortgage and navigate the city’s post-Covid landscape, and “Sleep No More” agreed to the amended lease with the understanding that it would renegotiate once Centaur was in a better financial position, according to the lawsuit.
The new lease required Centaur to make a good-faith effort at refinancing its mortgage, extended “Sleep No More’s” tenancy to 2032 and raised its rent significantly to about $5.1 million, a more than $1 million jump, court papers say. However, Centaur assured the business it would need to pay only $5 million in rent for the first year and said the only reason it even included proposed rents in the lease was to help renew the building’s mortgage, according to the suit.
“Sleep No More” signed the lease and paid its $5 million in rent for 2022-2023, but Centaur did not attempt to refinance its mortgage and demanded “Sleep No More” pay its rent in full in mid-2023, the lawsuit claims.
The show responded to this reversal by telling Centaur it would exercise its right to terminate the lease and leave the building before the end of 2023, but “Sleep No More” opted to stay after Centaur said it could remain in the building rent-free if it still paid certain fees and provided revenue and expense projections, according to the suit. Centaur then allegedly reversed itself in January, once more saying the full rent was now due.
Centaur also started suing the business, including through its lawsuit over the public assembly permit, which the show described as an effort “to spin an administrative issue into an issue of public safety.”
“We proposed a fair and equitable solution as a way forward,” “Sleep No More” principal Arthur Karpati wrote in a January email to Centaur head Harlan Berger, “and your [sic] again plotting how to squeeze all the juice out of the lemon.”
“Sleep No More” is suing Centaur for breach of contract and fraud. It is seeking an unspecified amount of damages from the court.
“We refute the claims made as they are unfounded and do not accurately reflect our commitment to fulfilling our financial obligations as the owner of the premises,” Centaur said in a statement, also accusing Sleep No More of being behind on rent. A representative for “Sleep No More” declined to comment on the lawsuit.
“Sleep No More” had announced in November that it was going to close its show, a version of William Shakespeare’s “Macbeth” in which audience members decide where to go and what to see, in late January. Although this announcement happened amid the production’s alleged problems with its landlord, producer Jonathan Hochwald told The New York Times at the time it was closing because of increasing production costs.
The show has extended its run several times since its initial announcement, most recently pushing back its final production from April 28 to May 27, according to its website. The reason it lists for the May extension is the same one it gave for the April one: “an outpouring of admiration.”
This story has been updated to include a comment from Centaur Properties.
Eddie Small , 2024-04-03 18:54:14
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