Billionaire investor Charles Cohen has sold off one of his best pieces of land in Midtown Manhattan and plans to use the proceeds to partially repay his most aggressive creditor: Fortress Investment Group, which is coming after him for a nearly $200M personal guarantee.
But Fortress isn't happy with the way the deal went down.
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Vornado announced Wednesday afternoon that it acquired 3 E. 54th St., a property that sits between Fifth and Madison avenues in the Plaza District, for $141M.
The REIT bought the debt tied to the property, totaling $107M, in 2024 and 2025, it said in the release, and it applied that as credit toward its purchase price. It plans to demolish the property immediately.
The price is far less than what Cohen's attorneys told Fortress and a New York State Supreme Court judge last year the property would fetch. Its sale, along with that of 623 Fifth Ave., was intended to generate proceeds to pay down a $187.2M personal guarantee tied to a half-billion-dollar loan Fortress gave Cohen in 2022.
Cohen defaulted on the debt in 2024, but after a foreclosure didn't cover what Fortress was owed, the private equity giant has continued to press Cohen in the courts to cover the guarantee. An appeals court ruled in February that Fortress could collect on the guarantee.
In an August letter, an attorney for Cohen said his real estate firm, Cohen Brothers Realty Corp., was under contract to sell the 19-story, Emery Roth-designed building for $188M to an undisclosed buyer. It owns a 63% stake in the 300K SF property, Crain's New York Business reported last year.
Cohen's attorneys wrote that “an international wire has been initiated (for both the Deposit as well as the balance of the Purchase Price).”
In an October email filed as an exhibit to a motion on Monday, Cohen Brothers told Fortress' attorneys that “buyer’s funds have not been wired despite daily assurances from buyer that funds are expected soon,” and “the sale is imminent with a closing date to be determined.”
But that deal never happened, and Vornado's deal was revealed and executed in a matter of days, according to court filings.
In a letter to New York Supreme Court Justice Joel Cohen on Tuesday, Cohen's attorneys said they had accepted an offer from Vornado that was expected to close as soon as Wednesday.
“There will be a significant surplus of $30 million or more to pay down the judgment,” Kevin Nash, a partner at Goldberg Weprin Finkel Goldstein LLP representing Cohen, wrote in the filing.
Tuesday afternoon, Fortress' attorneys wrote in their own letter to Justice Cohen that they were blindsided by the new deal, adding that it covers only a pittance of the $170M Charles Cohen still owes.
“That is a very far cry from satisfying the Judgment debt,” the filing states.
The $218M sale of 623 Fifth Ave., also to Vornado, was expected to generate $70M for Cohen to pay Fortress — bringing its total between the two property sales to $100M. But Fortress said in court filings it only ever received $30M from the 623 Fifth deal.
The lender is seeking to subpoena Cohen Brothers executives to get them to turn over financial records and has asked the judge to place the properties into receivership.
“Given that Cohen’s ‘plan’ to satisfy the Judgment primarily focused on selling these two properties, there is no question that Fortress will need to continue to enforce its Judgment against Cohen and that a receiver should be appointed,” Kobre & Kim attorney Josef Klazen wrote in the letter.
A spokesperson for Fortress declined to comment. A Cohen Brothers spokesperson didn't respond to Bisnow's request for comment.
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