Fortress Investment Group is moving ahead with a foreclosure on the equity interests in a massive real estate portfolio owned by Cohen Brothers.
Fortress launched a Uniform Commercial Code foreclosure on a wide-ranging portfolio which includes a redevelopment site in New York, a hotel in South Florida and 50 movie theaters. Fortress alleges a Cohen Brothers entity owes the lender $548.8 million on a loan.
The foreclosure is among the largest, if not the largest, U.C.C. foreclosures of all time. The auction is set for July 1.
Newmark’s Brock Cannon, Adam Spies and Doug Harmon are spearheading the marketing of the sale. Matthew Mannion of Mannion Auctions is the auctioneer.
A U.C.C. allows a lender to foreclose on the shares or interests of the company controlling the real estate as opposed to the actual property. By acquiring shares of a company, the lender can bypass the lengthy judicial process.
Cohen’s real estate portfolio has come under stress since the pandemic. In March, Fortress alleged Cohen, the head of Cohen Brothers Realty, defaulted on $534 million in debt tied to seven properties also included in the U.C.C. foreclosure: a Florida design center, a Westchester site, New York office tower, Fort Lauderdale hotel and movie theaters.
Fortress, an aggressive lender, filed a lawsuit against Cohen, seeking a $187 million judgment — Cohen’s payment guarantee.
At the time, Cohen’s senior vice president Dave Fogel, said, “We want to take the high road — we don’t litigate in the papers and we intend to defend.”
Higher interest rates and remote work have carved a path of destruction throughout New York’s commercial real estate market. Landing a refinancing is harder and debt costs are making it more difficult for numbers to pencil out.
Cohen inherited his family’s real estate firm from his father and uncles. In 2018, he called real estate his “day job” compared to his true passion, cinemas.
“I always wanted to be a theater chain owner,” he told Variety.
An entity tied to Cohen Brothers filed a lawsuit last week against Fortress seeking to stop the U.C.C auction. Cohen Brothers argues that without a proper declaration of a default, Fortress cannot consider moving ahead with the auction. Cohen Brothers alleges Fortress also reneged on an agreement with Cohen at the last moment, leading to the litigation.
Cohen Brothers did not immediately return a request for comment. Fortress also did not respond.