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Charles Cohen has pushed back hard against the lender seeking millions from him in a blistering affidavit that accuses the firm of manufacturing a loan default to go after him and potentially causing more than $1 billion worth of damages to his properties.
International investment firm Fortress Investment Group had agreed to lend entities tied to Cohen’s namesake firm Cohen Bros. up to about $534 million in 2022 and sued Cohen over the funds in March, claiming the borrowers had defaulted on the payments in February and that Cohen had personally guaranteed the loan. But Cohen argues in his response that Fortress pulled out of an agreement they made over the funds in bad faith and at the last minute, meaning their entire suit should be dismissed.
Cohen and his affiliates reached this agreement with Fortress in December, he said. Under the alleged deal, Fortress would defer payments and extend the loan through the third quarter of 2025, while Cohen would put up 49% of his interest in the Manhattan office building at 3 Park Ave. and the Manhattan design center at 979 Third Ave. as additional collateral.
However, Fortress reneged on this agreement “at the 11th hour,” telling Cohen on Jan. 30 they would no longer honor it and giving him and his affiliates just 48 hours to pay Fortress about $19.2 million, he claims. This came as a huge shock to Cohen.
“All of us believed that we had a deal and there was no indication at all from Fortress between December 14, 2023 and January 30, 2024, that we did not have such a deal,” he wrote, adding that the company’s behavior “smacks of bad faith.”
Cohen accuses Fortress of engineering a default so the company could sue him, given his personal guarantee of the loan. He says he “never would have agreed to increase my personal liability in this manner” if not for the agreement they reached in December.
Fortress’ conduct calls the validity of the February default into question and warrants denying the company’s motion for a summary judgment and dismissing their suit, Cohen argues.
The real estate executive also accuses Fortress of trying to maximize the harm and financial jeopardy their lawsuit places him in by unnecessarily filing unredacted copies of the loan agreement with it. This agreement includes sensitive information such as bank account numbers, along with what tenants in Cohen Bros. buildings pay in rent and when their leases expire. This allows Cohen’s competitors to easily poach its tenants, and brokers have already approached several of them about leaving, Cohen says.
This will likely end up causing more than $1 billion in damages across the company’s real estate portfolio, Cohen says.
Cohen’s attorney and a representative for Fortress declined to comment on the case.
Cohen serves as president of his namesake real estate firm, and Forbes estimates his net worth at about $3 billion. The company owns several office buildings in Manhattan, many of which are the type of older properties that the pandemic and its aftermath have hit particularly hard.
One of the buildings Cohen said he planned to use as collateral in the agreement with Fortress, 3 Park Ave., has been struggling with high vacancies. Its occupancy rate fell to 54% late last year, according to data from Fitch Ratings.
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Eddie Small , 2024-04-26 19:23:46
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