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<\/p>\nAnother\u00a0crown jewel of billionaire Charles Cohen’s real estate portfolio is at risk.<\/p>\n
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\n The entrance to the Decoration & Design Building at 979 Third Ave.\n <\/p>\n
The 18-story Decoration & Design Building on Manhattan’s Upper East Side<\/a>, better known as D&D, has been a one-stop shop for interior decorators and fashion designers for decades.<\/p>\n But tenants have been fleeing since the pandemic, and its income has plummeted.\u00a0Its owner, Cohen Brothers Realty Corp<\/a>., failed to pay off its $150M loan when it matured on May 6.<\/p>\n The mortgage, which is securitized in two CMBS trusts, was transferred to special servicing this month, according to Morningstar Credit. Green Loan Services<\/a> was appointed as special servicer for the debt in April, according to a filing with the Securities and Exchange Commission<\/a>.<\/p>\n \u201cIt\u2019s business as usual,\u201d Cohen Brothers General Counsel David L\u00f3pez said\u00a0in an email.\u00a0\u201cThis is a maturity default. We are actively working with the lender. We are currently in the market to refinance the loan shortly.\u201d<\/p>\n A spokesperson for Green Loan Services, SL Green<\/a>‘s debt servicing arm, declined to comment.<\/p>\n The 588K SF building was developed in 1965, and Cohen acquired it in 1996 for $70M, according to Crain’s New York Business<\/a>. Citigroup<\/a> issued a $165M loan for the building in July 2015, according to property records.\u00a0<\/p>\n Fitch Ratings\u00a0downgraded the\u00a0CMBS\u00a0bonds<\/a> backed by the loans last year, citing D&D’s flagging performance and rising ground rent as one of the key drivers.\u00a0<\/p>\n The land underneath D&D is owned by the Rice Foundation, and the ground rent is rising after an extension of the lease in 2024. Annual payments started at $5.8M and are set to hit $10.5M in the 12th year of the lease,\u00a0according to Fitch.<\/p>\n Occupancy at the building was 63% at the end of 2025, down from 95% in 2015 and 83% at the end of 2020, according to Morningstar Credit. D&D’s annual revenue has fallen\u00a0to $36.7M from $48.4M, and it\u00a0is bringing in\u00a0less than half of the cash it once did.<\/p>\n The loan was current as of last month, according to servicer commentary, which says that a delinquent tax notice was sent to Cohen in December.<\/p>\n Cohen is also facing foreclosure at a separate building connected to D&D. A lender\u00a0filed suit in March<\/a> in an attempt to seize the five-story 222 E. 59th St. after\u00a0the developer\u00a0defaulted on a $7.5M loan. L\u00f3pez\u00a0told The Real Deal<\/a> that high ground rent was to blame for the default.<\/p>\n But those are just the tip of the iceberg of the issues facing Cohen\u2019s\u00a0vast real estate portfolio.\u00a0<\/p>\n Cohen Brothers’ headquarters building at 750 Lexington Ave., built\u00a0by Charles Cohen<\/a>‘s father, was lost to\u00a0foreclosure in January<\/a>. And Cohen is\u00a0still trying to pay off a $187.3M personal guarantee he owes Fortress Investment Group<\/a> after defaulting on a $534M loan.\u00a0<\/p>\n He sold\u00a0623 Fifth Ave.<\/a>\u00a0and\u00a03 E. 54th St.<\/a>\u00a0to\u00a0Vornado Realty Trust<\/a>\u00a0in recent months for a combined $359M, but those deals only generated $52M in proceeds to pay off Fortress. The Mubadala\u00a0Investment Management-controlled lender has accused Cohen of stall tactics and only trying to sell his least valuable buildings.<\/p>\n A New York judge in March\u00a0gave Cohen 45 days<\/a> to come up with the remaining $135M he owes the lender, otherwise Fortress would be allowed to take over some of his assets and sell them itself.\u00a0<\/p>\n Cohen and Fortress agreed last month to extend that deadline 30 days to May 20 to close a deal that Cohen \u201csays will generate funds sufficient to satisfy the remaining balance of the debt,\u201d according to a court filing<\/a>. Cohen also agreed to pay $12M of Fortress’ attorneys fees.<\/p>\n