Embattled billionaire Charles Cohen was dealt another blow this month with a staggering reappraisal.
The value of 750 Lexington Avenue, home to Cohen Brothers Realty’s corporate office, was cut to just $50 million, according to Morningstar Credit. That’s an 83 percent decline from the property’s 2015 valuation of $300 million.
David Fogel, senior vice president at Cohen Brothers, declined to comment on the reappraisal.
The $130 million loan tied to the Midtown office building transferred to special servicing in October for payment default, according to Trepp. As of March, Cohen was over three months delinquent on debt payments and servicer commentary signals foreclosure is on the table.
“Local counsel has been retained to file for foreclosure and/or receivership, if necessary,” a March update in Morningstar reads, noting a workout could still be in the cards.
“Things aren’t as bad as they’re made out to be,” Fogel said, responding to the servicer commentary.
“We are in a positive dialogue with the servicer and hope to have the matter resolved shortly,” he added. “We hope to have some good things to report.”
750 Lexington got battered in the early years of the pandemic. In November 2020, Cohen’s loan started amortizing, sending a monthly payment of $163,000 soaring to $1.9 million. Occupancy in 2021 slipped to 71 percent, and in June of that year, the loan transferred to special servicing for imminent default, servicer commentary details.
Cohen hammered out new terms — reduced interest payments, taxes and deferred principal — and the loan left special servicing a few months later.
But by the end of 2022, Cohen had shed more tenants — occupancy hovered around 66 percent — and revenue was not covering debt service.
Then WeWork served a critical hit. The coworking firm quit paying rent in October on a lease that comprised 23 percent of 750 Lexington. Cohen’s loan went back to special servicing the same month.
As of last fall, WeWork had not rejected its lease at the property, according to Morningstar’s most recent update.
This month, the coworking firm said it had nailed down next steps for 90 percent of its locations, amending 150 leases, exiting 150 and staying put in another 150.
A spokesperson for the firm said conversations around 750 Lexington are ongoing and WeWork has neither rejected nor assumed the lease. The spokesperson added that the coworking firm is paying rent, but declined to say how much or when it resumed payments. Fogel declined to comment on the lease.
750 Lexington is just one pain point in Cohen’s CRE cluster headache.
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The billionaire was delinquent on nearly $1 billion in debt as of late last month. About half of those loans back New York office buildings, properties that include 222 East 59th Street and the Decoration & Design Building at 979 Third Avenue.
The other half is a $534 million loan made by a Fortress Investment Group subsidiary that Cohen defaulted on in February. Seven properties collateralize the debt — a Florida design center, Westchester redevelopment site, New York office tower, Fort Lauderdale hotel and three theaters in as many states.
Fortress sued in March demanding an $187 million judgment plus interest, legal fees and expenses. The case is ongoing.