515K SF Houston Office And Showroom Fending Off Foreclosure Attempt
A financially distressed Class-A building in Houston’s Galleria area faces a drop in value and potential foreclosure, according to Morningstar Credit data and Harris County records.
The Decorative Center of Houston, a 515K SF office and showroom at 5120 Woodway Drive, has a new appraised value of $48.8M, Morningstar Credit reported this month.
That is down from a $77.8M appraisal in 2014, according to Morningstar. Meanwhile, the $50M loan on the building is in special servicing after years of decreasing cash flow and tenancy left the building 59% occupied, the research and analysis platform reported.
The Decorative Center is scheduled to appear at the Harris County foreclosure auction next week, according to a substitute trustee’s sale notice, but a representative of the owner told Bisnow that loan negotiations are ongoing.
The property is owned by Decorative Center of Houston LP, according to public documents, and it is included in Cohen Brothers Realty Corp.’s online portfolio. Morningstar lists the deal sponsor as Charles Cohen, the New York-based billionaire real estate developer and CEO of Cohen Brothers Realty.
The Decorative Center of Houston is managed by Cohen Brothers Realty Corp. of Texas, a separate entity, and Charles Cohen has no personal liability related to the loan, Cohen Brothers Realty Senior Vice President David Fogel said.
Loan holders often use foreclosure filings as negotiation tactics, and a filing is not necessarily an indication that a property will be foreclosed upon.
“We are working towards a mutually satisfactory resolution,” Fogel told Bisnow.
Ladder Capital Finance issued Decorative Center of Houston LP a $50M loan for the building in December 2014, of which $43M remains outstanding, according to Morningstar. The loan was transferred to special servicing upon maturity default in January, it said.
The Decorative Center offers more than 35 interior design showrooms with furniture, fabrics, lighting, flooring, wall coverings, antiques and other accessories, according to its website.
Harris Central Appraisal District valued the building at $57M this year, according to its website. That is higher than the appraisal cited by Morningstar but down from HCAD’s 2024 value of $64.9M.
Cohen Brothers Realty Corp. also faced troubled debt in its portfolio last year, resulting in the loss of four properties at a New York City foreclosure auction in November, Forbes reported.
