The troubled office tower went to auction in Lower Manhattan on Wednesday, but attracted no bids. The upset price, or minimum bid, was set at $161,854,848.66, but the property returned to the lender.
The auction raised questions from a potential bidder, who submitted legal advice, as to whether the claimant would consider lowering the minimum bid. But that potential buyer refused to identify himself.
The auction marks not only a change of ownership for the office building, but also a new low for billionaire Charles Cohen, who heads Cohen Brothers. Cohen has lost control of several properties in his battles with lenders. But 750 Lex was a legacy of the company, developed in the 1980s by Cohen’s father and home to the company’s own offices.
The foreclosure and auction are the result of a $130 million refinancing loan on the property that Cohen personally sponsored in 2015. At the time, 750 Lex was valued at $300 million, according to Morningstar Credit. According to the most recent appraisal, the amount was only $41 million, which represents an 85 percent reduction.
Also known as 1 International Plaza, the 30-story building is located on the corner of East 59th Street and Lexington Avenue, where Midtown meets the Upper East Side.
The building’s financial freefall began in 2022, when occupancy began to decline and Cohen fell behind on payments. Major retail tenant Zara vacated its space and months later, beleaguered coworking company WeWork stopped paying its rent, according to information provided to Morningstar.
Net operating income in 2023 was a quarter of what it was when the loan was underwritten. Once full, the occupancy rate dropped to 69 percent.
Cohen worked out a lease modification with WeWork after the company declared bankruptcy, shortening the term and tying rent to revenue from the space. But it wasn’t enough to save the building.
Special service provider LNR Partners filed a foreclosure case in 2024 and won summary judgment last summer.
According to Morningstar Credit, the occupancy rate had risen again to 73 percent in June. But net operating income, excluding debt service, was just 1.8 million, just 14 percent of what it was in 2015.
Elsewhere, Cohen continues to battle with Fortress Credit. The billionaire owes a personal debt of $187 million to the lender after defaults on a $534 million loan portfolio he had guaranteed. He has so far sold two buildings – 3 East 54th Street and 623 Fifth Avenue – to Vornado Realty Trust and used $52 million of the proceeds to pay Fortress. The lender has asked the court for a trustee to sell Cohen’s assets, saying the developer “cannot be trusted” to do so himself.
In response, Cohen apparently told the court that he was working out a refinancing deal with a real estate fund, according to Fortress court documents. A judge has asked Cohen to present concrete evidence from that trial.
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