Brookfield's $130M Loan for Brooklyn Office Tower in Special Servicing

Canadian real estate giant Brookfield Asset Management is moving to head off trouble with loans backed by office towers in Brooklyn and Denver.

This week, Brookfield disclosed that a $130M loan on 15 MetroTech Center, a 675K SF office tower on Myrtle Avenue in Brooklyn, is being transferred to special servicing ahead of its maturity date.

The CMBS on the MetroTech tower currently is not in default, and Brookfield said it’s hopeful it can reach a deal to modify the loan, Bloomberg reported. Brookfield will continue to manage and lease 15 MetroTech Center.

Brookfield acquired MetroTech Center in 2018. Last year, it rebranded the site as Brooklyn Commons and announced a $50M upgrade.

Brookfield and MetLife recently worked out a modification to a loan on the Republic Plaza tower in Denver. The loan, which had gone to special servicing, will be extended through March 2026.

In hailing the deal, Brookfield—which already has lost two trophy office towers in Downtown Los Angeles this year to receivership—said it views negotiations with lenders spurred by special servicers as a viable path for loan modifications.

“Republic Plaza is an in-demand office asset, and we are glad to have achieved a positive outcome as expected, both for the building and downtown Denver,” said Andrew Brent, a Brookfield spokesperson, in a statement. “As we’ve said, special servicing is often a path toward a successful resolution for a property that requires a loan modification.”

Toronto-based Brookfield’s office assets have been clobbered this year as interest rates have increased and occupancy levels have been hobbled by hybrid work patterns.

In February, Brookfield defaulted on two senior loans backed by the DTLA’s Gas Company Tower totaling $350M in debt. The landmark tower, headquarters for the Southern California Gas Co., is located at 555 West 5^th Street.

Brookfield also defaulted in February on $319M in loans for 777 South Figueroa St., also known as the 777 Tower.

The 54-story Gas Company Tower was placed in receivership by the 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.

According to court filings, the REIT failed to pay off the loan by the maturity date of Feb. 9 and it failed to pay an advance of $3.6M in property taxes by April 10.

In April, Brookfield defaulted on a $161.4M mortgage backed by more than a dozen office buildings, mainly in the DC market.

At the end of May, 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 April—Gregg Williams of Trident Real Estate—was again tapped by the court to handle the receivership for EY Plaza, a 41-story tower at 725 S. Figueroa St.

At the beginning of May, 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.