Charles Cohen Defaults On $150M Decoration & Design Building Loan
Another crown jewel of billionaire Charles Cohen's real estate portfolio is at risk.
The 18-story Decoration & Design Building on Manhattan's Upper East Side, better known as D&D, has been a one-stop shop for interior decorators and fashion designers for decades.
But tenants have been fleeing since the pandemic, and its income has plummeted. Its owner, Cohen Brothers Realty Corp., failed to pay off its $150M loan when it matured on May 6.
The mortgage, which is securitized in two CMBS trusts, was transferred to special servicing this month, according to Morningstar Credit. Green Loan Services was appointed as special servicer for the debt in April, according to a filing with the Securities and Exchange Commission.
“It’s business as usual,” Cohen Brothers General Counsel David López said in an email. “This is a maturity default. We are actively working with the lender. We are currently in the market to refinance the loan shortly.”
A spokesperson for Green Loan Services, SL Green's debt servicing arm, declined to comment.
The 588K SF building was developed in 1965, and Cohen acquired it in 1996 for $70M, according to Crain's New York Business. Citigroup issued a $165M loan for the building in July 2015, according to property records.
Fitch Ratings downgraded the CMBS bonds backed by the loans last year, citing D&D's flagging performance and rising ground rent as one of the key drivers.
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, according to Fitch.
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 to $36.7M from $48.4M, and it is bringing in less than half of the cash it once did.
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.
Cohen is also facing foreclosure at a separate building connected to D&D. A lender filed suit in March in an attempt to seize the five-story 222 E. 59th St. after the developer defaulted on a $7.5M loan. López told The Real Deal that high ground rent was to blame for the default.
But those are just the tip of the iceberg of the issues facing Cohen’s vast real estate portfolio.
Cohen Brothers' headquarters building at 750 Lexington Ave., built by Charles Cohen's father, was lost to foreclosure in January. And Cohen is still trying to pay off a $187.3M personal guarantee he owes Fortress Investment Group after defaulting on a $534M loan.
He sold 623 Fifth Ave. and 3 E. 54th St. to Vornado Realty Trust in recent months for a combined $359M, but those deals only generated $52M in proceeds to pay off Fortress. The Mubadala Investment Management-controlled lender has accused Cohen of stall tactics and only trying to sell his least valuable buildings.
A New York judge in March gave Cohen 45 days 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.
Cohen and Fortress agreed last month to extend that deadline 30 days to May 20 to close a deal that Cohen “says will generate funds sufficient to satisfy the remaining balance of the debt,” according to a court filing. Cohen also agreed to pay $12M of Fortress' attorneys fees.
Cohen has lost $2B since 2023 amid the ongoing disputes, according to Forbes, which pegged his net worth at $1.6B last year, down from $3.7B in 2023. Besides a portfolio of office buildings clustered around Third Avenue, he also owns the Landmark Theatres cinema chain.
