The Tribeca penthouse is the kind of luxury New York home that would draw lingering looks on StreetEasy. It’s fitting, given that it’s owned by Michael A. Smith, the real estate site’s co-founder and former chief executive.
But now, Smith’s condo, which he expanded upward to add more stories, is being targeted for demolition by McDonald’s.
According to a lawsuit filed by the fast food company just before Thanksgiving, the penthouse on Reade Street was built over roof space reserved for HVAC equipment used by a McDonald’s restaurant around the corner on Greenwich Street.
McDonald’s is seeking at least $10 million in damages and restoration of the roof to its original state. The company has also raised the possibility of designating alternative space for its equipment.
Emily Reisbaum, a lawyer for Smith, declined to comment on the lawsuit. Lawyers for McDonald’s didn’t respond to a request for comment.
The legal fight is one of the latest clashes over a luxury New York penthouse. For nearly three years, Ray Dalio has been fighting a lawsuit by a SoHo neighbor who claims his own apartment was damaged by the Bridgewater Associates founder’s addition of a large roof deck. Bill Ackman faced community opposition over his plan for an Upper West Side glass penthouse.
Smith’s Reade Street condo was expanded through a 2007 proposal, and now totals nearly 3,700 square feet of interior space with four outdoor decks and a swimming pool, according to a court filing.
In 1987, the original five-story brick building at the site was included in a plan for a condo project that also encompasses nearby properties on Reade, Chambers and Greenwich streets. McDonald’s says it acquired four commercial units at the project in 1990 and negotiated a number of easements.
One of those easements allowed the company to install a cooling tower on the roofs of the Reade Street properties. McDonald’s says it used that space until 2006, when it installed a new system that didn’t require a cooling tower. But the company said it never relinquished its rights and realized in 2012 that its Greenwich Street restaurant was having “serious HVAC problems.”
According to McDonald’s, years of back-and-forth followed, during which its proposal to install HVAC equipment in the project’s courtyard was “soundly rejected” by the condo board, which Smith led as president at the time. In 2021, McDonald’s says it informed the board that it was exercising its original easement, but a consulting engineer subsequently informed the company that the roof space was “no longer there” because a penthouse had been constructed on it.
Smith co-founded StreetEasy, which was eventually acquired by Zillow Group for $50 million in 2013. He previously worked in other tech-related roles.
His penthouse’s expansion has come under scrutiny before. In a 2021 action that’s ongoing, the condo board claims Smith abused his position as its former president to mislead fellow owners about his expansion. The board is asking for at least $5 million in damages.
The board claims that Smith, in a 2007 letter, proposed adding just one floor to his then-1,253-square-foot unit, mainly by enclosing an existing outdoor space, and agreed to pay $20,000 to compensate the building for that renovation. But Smith allegedly used his position as the board’s president to amend his proposal and dramatically expand his project, all while concealing his actions.
“This expansion included many additional elements and areas that were never disclosed to the board, including but not limited to a rooftop pool,” the board said in the 2021 lawsuit.
Reisbaum, Smith’s lawyer, declined to comment on the board’s suit, but pointed to a 2021 motion to dismiss. Smith says in the filing that the board properly approved the renovation plan in 2007 and that the work was fully completed and visible by 2010, meaning any legal challenges are barred by the statute of limitations.
A lawyer for the board, which is also named as a defendant in the McDonald’s case, didn’t have an immediate comment on either case.
