Fortress Investment Group is one step closer to potentially triggering “one of the largest foreclosures in American history,” according to financial news outlet Benzinga—and the design industry is caught up in the turmoil. The lender’s latest court filings outline its revised foreclosure plans against Cohen Brothers Realty. If successful, the case is poised to see new ownership for the Design Center of the Americas in Dania Beach, Florida, as well as upend the way commercial real estate debt is collected.
Back in early June, Charles Cohen—the billionaire landlord whose company’s holdings include design centers in New York, Houston, Los Angeles and Dania Beach—managed to temporarily stave off a $544 million foreclosure brought by the lender. At the time, a New York Supreme Court judge ruled that the proposed foreclosure proceedings would not be “commercially reasonable” under the state’s Uniform Commercial Code—a set of laws that govern commercial transactions—but gave Fortress an opportunity to submit a foreclosure plan with revisions by July 15.
On Monday, Fortress submitted the updated proposal, which includes new details meant to address concerns brought forth by Cohen’s team and the court at the last hearing in late May, such as a description of the pledged interests or assets owned, the terms of the sale, and the eligibility of bidders.
According to the filing, Fortress worked with a team of outside professionals specializing in UCC auctions to revise the proposal, and attempted several times to meet with Cohen Brothers Realty representatives, who “have not meaningfully engaged with Fortress regarding their purported concerns about the new proposed plan.” The filing claims that the objections Cohen Brothers Realty has voiced—including a nine-month marketing period rather than the plan’s 60 to 90 days—are “unsupported by law and fact, and do not serve as a basis to further enjoin this agreed-upon Auction.”
In the revised proposal, Fortress outlines the impacted Cohen Brothers holdings and details its intentions to sell them in five individual auctions, starting with the Design Center of the Americas. (Additional auctions will offer the hotel Le Méridien Dania Beach at Fort Lauderdale Airport; the property development site at the former Doral Arrowwood Golf Club; the Landmark Theatres business and three theaters; and the Curzon Cinemas business.) Following the individual auctions, any interests that are unsold will be offered in a single, bulk auction. The document also sets a date for the auction—November 8, beginning at 12 p.m., at Kirkland & Ellis LLP’s New York office or via Zoom—and states that any party who signs an NDA and registers with real estate company Newmark can access the times and places of individual auctions and further details on terms of sale.
The filing goes on to describe Cohen Brothers Realty’s prolongation of the auction process as “troubling,” pointing to Curzon’s $10.25 million commitment to new projects with landlords “that the company’s financial performance will not support,” along with an upcoming change in headquarters that will require $1.2 million in upfront costs and a more expensive lease. It concludes by stating that in addition to the new proposal meeting the terms of commercial viability, dozens of bidders have already indicated an interest in the auction.
While a typical foreclosure process on a portfolio of this size might take years, Fortress’s use of the UCC puts the auction on a much faster track, in a process that unfolds in just a few months. As Benzinga reports, the UCC foreclosure process permits the lender to auction off pledged equity shares in Cohen Brothers against its distressed assets—allowing it to sell off the assets securing the loan without a court-appointed intermediary (which eliminates delays in court) and offering more control over the final sale price.
The foreclosure proceedings stem from a legal saga dating back to early April, when the news broke that Fortress had filed a $544 million lawsuit against Cohen Brothers Realty for defaulting on debt tied to seven properties, including the Design Center of the Americas. Weeks later, Cohen sought to have the suit dismissed, claiming that Fortress had reneged on an agreement to extend its loan through the third quarter of 2025, while Cohen put up 49 percent of his interest in the D&D Building and the Manhattan office building 3 Park Avenue as collateral.
Ultimately, the judge overseeing the case denied that motion. Despite Cohen’s attempt in early June to halt the impending foreclosure, this week’s filing might put it back on track—or pave the way for further legal back-and-forth between both parties. While Cohen will likely oppose the latest filing, if the auction were to eventually go through, it would reportedly be the largest UCC foreclosure on record. Should that happen, the effect could mean that the DCOTA might likely be coming under new ownership in the near future.
