Brookfield lender has yet to foreclose Brookfield has huge loan portfolio by defaulting they would be asking for hit on renewal terms on other loans ....Bruce Flattt may be starting a new course with Office mortgage debt renewals
777 Tower in Los Angeles
Photographer: Carol M. Highsmith Photography/Library of Congress
The company had the option to extend the maturity on the loans tied to the Gas Company Tower, but elected not to, according to its latest filing. It also elected not to get interest-rate protection that was required for loans for the 777 Tower property, which amounts to an event of default, the filing said.
“We believe DTLA’s decision to default on these two assets increases the risk for the remaining loans in their portfolio,” Barclays Plc research analysts Lea Overby and Anuj Jain wrote in a note Tuesday.
Brookfield declined to comment.
The values of comparable office buildings have broadly dropped, according to the Barclays analysts. Office vacancies have increased across the country since the pandemic made working remotely more routine. The vacancy rate in the Los Angeles central business district vacancy rate was 22.7% in the fourth quarter of 2022, according to a Jones Lang LaSalle Inc. report.
The Brookfield DTLA portfolio has a total of $2.28 billion in secured debt, according to a November filing. Other buildings with maturing debt include the Wells Fargo Centers North Tower with $500 million in debt due in October and the Wells Fargo Centers South Tower with $263 million maturing in November. The buildings have about $1.8 billion of floating-rate obligations, generally hedged with interest-rate derivatives, which can translate to increased payments as the Federal Reserve raises interest rates.
The lenders have not foreclosed on the two properties or exercised other remedies available to them, according to Brookfield’s filing. In January, Oaktree Capital Management wrested control of the building known for providing the exterior shots for the main office in the television series “L.A. Law” after the owner, Coretrust Capital Partners, went into default on a loan tied to the property.
The Brookfield news was previously reported by real estate publication CoStar.