Charles Cohen is looking at another foreclosure filing — the office landlord’s second in two weeks.
The special servicer on $130 million in CMBS debt backed by 750 Lexington Avenue filed the action. The head of Cohen Brothers Realty has been behind on payments since last summer.
The complaint notes multiple events of default, including Cohen’s failure to pay taxes, provide financial statements and certify that his “net worth and liquidity are not materially less than they were at the origination of the loan in 2015.”
Cohen’s net worth is at $3 billion, according to Forbes, although that figure might need updating given the state of his office portfolio. Cohen Brothers did not immediately respond to a request for comment.
Less than two weeks ago, Fortress Investment Group moved to foreclose on the equity interests in a $548 million Cohen portfolio after the billionaire failed to make debt payments. The U.C.C. foreclosure action is among the largest, if not the largest, in the U.S., sources say.
The portfolio in the Fortress case includes newer acquisitions and projects, including Cohen’s foray into independent movie theaters, his 2018 redevelopment of Le Meridien hotel in Fort Lauderdale and a Westchester county project to rework a shuttered resort on which he has yet to break ground.
By contrast, 750 Lexington is a legacy asset, a core piece of the Cohen property empire.
When Cohen Brothers Realty acquired the property for redevelopment in the early 1980s, Cohen’s father, Sherman Cohen, was still running the business. The firm’s offices are there.
But 750 Lex, completed in 1986 at 28 stories and known as 1 International Plaza, has been in trouble since the pandemic. Zara left its retail space there in 2022 and office tenants soured on the floors above.
As Covid decimated workplace attendance, Cohen’s $130 million debt started amortizing in late 2020 and loan payments surged over 1,000 percent to $1.9 million. In 2021, occupancy slipped to 71 percent and in June of that year the loan was sent to special servicing for imminent maturity default.
Cohen managed a speedy workout that deferred principal payments and cut interest payments and reserve requirements for property taxes. By August 2021, the loan was back with the primary servicer.
But the nearly 400,000-square-foot tower’s occupancy rate kept slipping. By December 2022, it was down to 66 percent and Cohen was only raking in enough revenue to cover half of his mortgage payments. Six months later, cash flow covered a little over one-third.
Things got worse in October 2023 when embattled WeWork quit paying rent. Cohen’s loan was again en route to special servicing.
Last month, a reappraisal axed the property’s valuation to $50 million, a whopping 83 percent cut from its 2015 value.
Ahead of the foreclosure filing, Morningstar in March noted that lawyers had been hired to file for foreclosure or receivership, if necessary.
Cohen Brothers senior vice president Dave Fogel batted away the threat last month, noting the office owner was in a “positive dialogue with the servicer.”
“Things aren’t as bad as they’re made out to be,” the long-term executive said. “We hope to have some good things to report.”
Cohen could still avoid foreclosure by negotiating new loan terms that would allow his firm to stave off an auction and buy time to beef up occupancy at 750 Lexington Avenue, which is between East 59th and East 60th streets.
As of April, WeWork had resumed paying rent, a spokesperson for the company said. And last week the coworking firm assumed its lease at the building, a bankruptcy filing shows — another bit of good news for Cohen.
The amendments included a reduced lease term and rent, and the addition of a revenue share model in which WeWork pays the landlord a percentage of the money it makes.
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