D&D Building landlord hits back against lender on $534 million lawsuit
Lawsuits | Apr 27, 2024
Earlier this month, the news broke that Charles Cohen—whose company, Cohen Brothers Realty, owns design centers in New York, Houston, Los Angeles and Dania Beach, Florida—is facing a $544 million lawsuit from lender Fortress Investment Group. The suit alleged that the real estate executive defaulted on debt tied to seven properties, including the Design Center of the Americas in Florida. The legal action comes after Cohen Brothers already fell delinquent last year on $635 million in loans backed by its New York properties, including the Decoration & Design Building. The new suit would bring the company’s debt up to at least $966 million.
But in a new affidavit filed this week, Cohen is seeking to have the entire suit dismissed. As Crain’s New York Business reports, the executive traces the issue back to an agreement he allegedly reached with Fortress in December, in which the lender would defer payments and extend its loan through the third quarter of 2025. In the meantime, he agreed to put up 49 percent of his interest in the D&D Building and the Manhattan office building 3 Park Avenue as collateral.
But according to Cohen, that’s not how the deal unfolded. He alleges that in late January, Fortress pulled back on the agreement “at the 11th hour,” giving Cohen Brothers 48 hours to pay the lender roughly $19.2 million. Writing that the company’s behavior “smacks of bad faith,” Cohen is accusing the firm of manufacturing a default in order to sue him after he had personally guaranteed the loan. In the affidavit, the real estate executive argues that Fortress’s approach offers sufficient grounds for dismissing the suit and denying the company’s motion for a summary judgment.
Cohen also accuses the investment management firm of attempting to cause additional damage to his business by filing unredacted copies of the loan agreement with its lawsuit. The documents disclosed sensitive information pertaining to tenants in Cohen Brothers buildings—including their rent payments and lease expiration dates. Already, he says, competitors have approached several tenants in an attempt to poach them. He alleges that Fortress’s actions will likely cause more than $1 billion in damages to his company’s real estate portfolio.
According to Crain’s, Cohen’s attorney and a representative of Fortress could not be reached for comment at press time.
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