Kohan's Manhattan Note: How Much Value Can Actually Be Realized

The Value Here Sits Between a Note and Title Transfer

The main article argued that Kohan's Series A bond bought time, but did not solve the two heavy questions underneath the story: refinancing and office exposure. The Manhattan note sits exactly at that junction, which is why it deserves its own continuation. On one side, this is not just another secondary-market mall asset and not another office building already owned like 311 South Wacker. On the other side, it is also not yet a stabilized office portfolio fully sitting inside the company. It is a collateral-realization story.

In March 2025, Kohan bought a secured note with a first lien on five Manhattan office buildings for about $17.4 million, against roughly $110 million of unpaid principal. The acquisition was funded, among other things, with a roughly $9 million loan carrying 13% interest and maturing in November 2026. In Note 18, the company says it expects to become the owner of the five properties during the second quarter of 2026 by virtue of the rights embedded in the note.

That is where the temptation starts. The presentation maps the collateral as five office buildings in Flatiron / Union Square, with 362,599 square feet, 88% occupancy, and $5.6 million of adjusted NOI on an LTM August 2025 basis. At the same time, it stresses that the acquisition price reflects a cost of $46 per square foot, while in the books as of September 30, 2025 the asset is still recorded as a real-estate-backed loan at $17 million rather than at the properties' fair value.

That is the heart of the story. If you read the Manhattan note only through the purchase price, you see unusually deep upside. If you read it only through the carrying value, you miss how much real estate economics may sit behind the collateral. The right reading sits in the middle: there is a real gap between entry price and the economics behind the lien, but that gap still does not belong to bondholders as if title transfer, lease work, and clean NOI capture have already happened.

Three points matter immediately:

• The economics behind the note look large relative to entry price, but for now they are still the economics of collateral rather than completed ownership.
• Current NOI is far more concentrated than "five Manhattan office buildings" sounds, because two buildings generate $4.2 million out of the $5.6 million total, roughly 75% of portfolio NOI.
• One of the larger buildings is barely contributing NOI, so part of the upside sits exactly where execution is weakest today.

What Actually Sits Behind the Collateral

The presentation provides enough detail to show that the question here is not whether there are real assets behind the note, but what kind of assets Kohan would actually inherit if the collateral is fully realized.

That chart makes clear that this is not a package of five broadly similar buildings. It is a collateral set held together by two cash-generating assets, two smaller but functioning assets, and one 66,360-square-foot building that barely converts space into operating income.

That leads to the first non-obvious point: the weak building is not a side issue. 45 - 47 West 27th accounts for about 18% of total area, yet contributes only about 0.2% of package NOI. That means a material part of the upside case sits exactly where current performance is weakest.

The second point is concentration. The presentation says 27% of total area is leased to Anheuser Busch under a lease running until 2030. That is both stabilizing and limiting. On the one hand, the package has a meaningful anchor tenant. On the other hand, a notable share of the operating base depends on a single tenant. So this is not a clean five-building basket with broad tenant balance everywhere.

The third point is that 119 - 125 West 24th and 13 - 15 West 27th together account for about 58% of total area, but roughly 75% of NOI. That matters because it explains what Kohan really bought: not a uniform Manhattan office package, but a structure where current cash flow is already concentrated in specific assets while a good share of the upside still depends on fixing a weak one.

Why This Still Is Not Value You Can Count Yet

The easy mistake here is to turn the story into immediate arbitrage. If Kohan paid $17.4 million for a note backed by a package showing $5.6 million of NOI, and if the presentation highlights a cost basis of $46 per square foot, the move can look like instant value creation. That reading is too fast.

First, the company itself says that in the books as of September 30, 2025 the asset is recorded as a real-estate-backed loan at $17 million rather than at the properties' fair value. That means the gap between accounting carrying value and the collateral economics may indeed be real. But it still has to pass through actual title transfer, and only after that through property management, leasing, and contract improvement. Until then, this is not NOI already flowing into Kohan as owner.

Second, the entry price was not free. Note 18 shows that the purchase was funded, among other things, with a roughly $9 million loan at 13% interest. On an annual basis, that is about $1.17 million. Against $5.6 million of NOI, that financing layer alone absorbs roughly one-fifth of the gross operating income shown in the presentation.

And even that chart is still generous. It does not include any enforcement or title-transfer costs, any lease-up or repositioning costs, or the fact that all five properties sit on ground leases for terms of 15 to 25 years with extension options out to 2100 and beyond. The presentation also says explicitly that the company plans to improve and upgrade leases through renewals or tenant replacement. That is not a passive office package ready to be harvested. It is a package that still needs work.

There is one more point that can slip past the market. The operating snapshot being shown to investors is not from December 31, 2025 and not from the expected transfer date in the second quarter of 2026. The operating figures are on an LTM August 2025 basis, and the accounting framing is as of September 30, 2025. So anyone trying to capitalize the Manhattan note today as if it were a near-delivery snapshot is assuming continuity that the documents do not actually prove.

In other words, the value may be real, but it is not yet accessible. For this to move from a cheap-collateral story to one of actual value capture, Kohan first has to take control, then hold on to the stronger tenants, and at the same time extract economics from the weakest building.

What Will Decide the Story in 2026

This continuation is not really about whether Kohan bought cheaply. That part is already clear. It is about three much more practical tests.

• First test: title transfer. Note 18 says the company expects to become owner during the second quarter of 2026. Until that actually happens, the market is still reading a claim on collateral rather than clean ownership.
• Second test: an updated operating snapshot. Close to the transfer date, Kohan will need to show what occupancy, NOI, and lease conditions look like relative to the August and September 2025 snapshot. Without that, it is hard to know whether $5.6 million still represents the real starting point.
• Third test: 45 - 47 West 27th. If that building stays weak, the Manhattan note remains mostly an entry-discount story. If occupancy and NOI improve there, that is where part of the realizable upside can actually begin to show up.

Above all of that sits the tenant-concentration question. Anheuser Busch gives the package a real anchor, but also underscores how much of the current stability sits with one tenant. As long as that lease base holds, the portfolio has a better floor. If that dependence weakens, the market will quickly start looking harder at the rest of the buildings.

Bottom Line

The main article argued that Kohan's office exposure is not only a risk bucket, but also a potential source of asymmetry if the company executes. The Manhattan note is the sharpest example of that argument. Behind an entry price of about $17.4 million sits a package presented with $5.6 million of NOI, 88% occupancy, and a $46-per-square-foot acquisition cost. That gap is real, and it is large enough to matter for the company's credit read.

But this is still not stabilized ownership, and it is not value already accessible to bondholders. It is collateral waiting to be realized, financed with expensive acquisition debt, described through operating data that are not current to year-end 2025, concentrated around one large tenant, and burdened by one meaningful building that is barely producing NOI.

So the right reading is not "Kohan found gold in Manhattan." It is something narrower and more useful: Kohan bought a deep-value option inside a distressed office-capital structure. If title transfer is completed, if the old operating snapshot still holds close to transfer, and if the weak building starts to work, the Manhattan note can move from an interesting anomaly to one of the most important sources of accessible value inside the portfolio. Until then, it remains a collateral-realization story rather than a stabilized asset story.