In a recent development, a New York State Supreme Court judge has set a November 8 auction date for the properties owned by Charles Cohen’s Cohen Realty Enterprises. This includes the U.S. Landmark and UK Curzon arthouse cinema chains that Cohen acquired in 2018 and 2019. The properties are under scrutiny due to a lawsuit filed by Fortress Credit Corp. earlier this year, citing default on a substantial loan backed by Landmark and other assets.
The potential closure of Landmark Cinemas could deal a significant blow to the struggling indie film industry, which is still recovering from the impact of the Covid-19 pandemic. Landmark has already faced challenges with lost leases and closures of key locations, such as the Westside Los Angeles theater, as well as theaters in San Francisco, Seattle, and Denver. Independent distributors have raised concerns about the upkeep of the remaining theaters but acknowledge the importance of these venues within the chain.
The properties owned by Cohen Realty Enterprises, including a design center, office tower, and hotel, served as collateral for loans totaling $534 million from Fortress Credit Corp. If the auction proceeds as planned, it could mark one of the largest Uniform Commercial Code (UCC) claims in New York real estate history. The structure of a single large loan secured by a group of real estate assets is considered somewhat uncommon in the industry.
Despite initial attempts to prevent the auction through legal action, Judge Joel M. Cohen ultimately approved the auction after Fortress Credit Corp. resubmitted its request. Efforts to negotiate a restructuring of the loan did not yield positive results, leading to the decision to proceed with the auction. While the future of the properties remains uncertain, the possibility of a turnaround still exists as the auction date is several months away.
The entertainment industry has seen notable changes in recent times, with Sony’s acquisition of Alamo Drafthouse and larger chains like AMC and Cinemark exploring strategic lease acquisitions. While the landscape of the exhibition industry is evolving, the fate of Cohen Realty Enterprises’ properties and the Landmark cinemas will be closely watched by industry insiders and stakeholders.