Eight Brookfield Malls Are Distressed

According to watch lists, eight of Brookfield’s US mall properties in financial distress and at least one super-regional has arrived at the same destination as two of the Canadian real estate giant’s trophy office buildings in Los Angeles: receivership.

Foreclosure proceedings began in January on one of Brookfield’s largest malls, the 1.7M SF Woodbridge Center, which sits at the confluence of four major highways in New Jersey where the Driscoll Bridge spans the Raritan River and connects northern NJ with the Jersey Shore.

Woodbridge Center has been under water since the beginning of the pandemic. In June 2020, two months after the mall lost its anchor, Sears, Brookfield started missing payments on a debt package valued at $366M on issuance and the loan was transferred to special servicing, Morningstar reported.

Lender Rialto Capital Advisors sued to send the loan into receivership in October 2021. In May 2022, the collateral at Woodbridge Center was appraised with an as-is value of $89M—a 77% drop from the value when the loan was issued in 2014. In January, when foreclosure proceedings began, occupancy stood at 63% in Woodbridge Mall, Morningstar said.

According to Trepp, seven other CMBS loans backed by US malls owned by Brookfield are on its watch list, including a $265M loan backed by Lower Manhattan’s Brookfield Place and $174M in debt backed by Chesterfield Town Center in Virginia and RiverTown Crossings in Michigan.

Brookfield’s Glenbrook Square in Indiana and Crossroads Center in Minnesota also are on the watch list, which includes properties that are at least 60 days delinquent. Brookfield owns 125 US malls and is one of the larger global retail players, with a portfolio encompassing an estimated 134M SF.

In April, Brookfield’s 52-story landmark Gas Company Tower in Downtown Los Angeles was placed in receivership by the Los Angeles County Superior Court after CMBS lenders Citi Real Estate Funding and Morgan Stanley filed a lawsuit asking the court to appoint a receiver to pave the way for the sale of the property, in lieu of a bankruptcy proceeding.

One month later, the same receiver that was appointed by the Los Angeles Superior Court to oversee the receivership on the Gas Company Tower at the end of last month—Gregg Williams of Trident Real Estate—was again tapped by the court to handle the receivership for EY Plaza, a 41-story tower also owned Brookfield’s DTLA REIT.

Williams has awarded a Colliers team the exclusive leasing and property management assignment for the 968K SF EY Plaza tower at 725 S. Figueroa St. Williams also tapped Colliers to market the sale of the Gas Company Tower.

Trepp reported that Brookfield defaulted on a $275M loan backed by EY Plaza. The loan was originated in 2020 by Morgan Stanley and Wells Fargo and then sold to CMBS investors. The delinquent CMBS package includes a $220M and a $35M mezzanine loan.