The Distress Record: Charles Cohen’s debt situation goes from bad to worse

Due to the realities of the market, The Real Deal is committed to tracking and reporting the latest in distressed properties and will roundup our weekly coverage through The Distress Record.

A couple of months ago, Charles Cohen had fallen behind on payments for more than $500 million in debt. 

Well, things have gone from bad to worse for Cohen and his properties, and the total has  ballooned to $635 million. 

On the bright side, Cohen claims he has not defaulted on any debt and that he’s working with lenders to remedy the problem. On the not-so-bright side, occupancy numbers at the investor’s properties — 3 Park Avenue, 222 East 59th Street, 750 Lexington Avenue, Crystal Pavilion at 805 Third Avenue, and the Decoration & Design building at 979 Third Avenue — give little reason for optimism.

Meanwhile in Los Angeles Luzzatto Company has defaulted on a $48 million loan tied to a West Adams office property that previously served as the headquarters of the millennial favorite salad chain Sweetgreen.

Luzzatto owes the entire principal under the loan tied to 3101 Exposition Boulevard, according to a notice of default filed with L.A. County this month. The loan, handed out by El Segundo-based TerraCotta Group last year, came due in August. 

Under California state rules, a foreclosure can be scheduled no earlier than 90 days after an initial notice of default. On 3101 Exposition, a foreclosure can be scheduled for Jan. 10. 

The office building, which was completed in 2020 and is attached to another roughly 30,000-square-foot space, has struggled to keep a tenant over the last few years.

TA Partners flew beneath the radar for most of its history. But that changed in early October when it defaulted on $200 million of debt tied to two multifamily projects near Irvine, California. 

It turns out the firm has a history of missing payments — TA fell behind on rent for its headquarters earlier this year, and its landlord is now seeking $28,700 in back rent. It also has $2 billion in assets and 2,700 units on the way in the LA-area. 

But, the developer has struggled to move the needle on many of those apartment projects, raising questions about its ability to pull off such ambitious projects.

In Irvine, TA is delinquent on payments totaling $11 million under two separate loans as of Oct. 1, according to two notices of default filed with Orange County. The loans are tied to two complexes at 18831 Von Karman Avenue and 17422 Derian Avenue. 

Mack Real Estate Credit Strategies provided two senior loans totaling $197 million in 2022, records show, to help TA finish construction without contributing more equity. 

“They have no idea what they are doing,” said one industry insider familiar with TA Partners, adding the two Irvine projects are a “total disaster.”

To add a little mystery to the market, Blackstone Mortgage Trust downgraded two of its loans tied to office buildings in Silicon Valley.

The unit of New York-based investment firm Blackstone downgraded the loans linked to two undisclosed office buildings in the South Bay, the San Francisco Chronicle reported.

The downgrade came on the heels of rising interest rates and soaring office vacancies fueled by a shift to remote work by tech firms.

Blackstone Mortgage Trust declined to provide the building addresses, square footage or property values.

For more on distressed properties and businesses:

Here’s an interactive map on StoryBuilt’s distressed Texas portfolio

WeWork is headed for one of the least-surprising bankruptcies in recent memory.

The Icebox Cafe in Florida filed for Chapter 11 bankruptcy, listing over $18 million in liabilities.

CA Ventures’ Tom Scott sold his private plane, after his investment may have flown too close to the sun. 

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