Brookfield Hands Keys Back to Lender for Manhattan's Brill Building

Brookfield’s appetite for trophy buildings increasingly seems like the Achillies heel of its office portfolio.

After giving up two of its trophy towers in Downtown Los Angeles in receivership earlier this year, the Canadian real estate giant is handing back the keys to a lender on the historic Brill Building, the first asset the company has surrendered in Manhattan.

Brookfield has transferred the deed to the Brill Building to Mack Real Estate Group in a transfer valued at $216M, according to a report from PincusCo.

The 11-story Brill Building, built during the Great Depression, was home to offices and recording studios where some of the leading musical acts of the 20^th century cut their tracks.

Brookfield acquired the Broadway landmark six years ago in a UCC foreclosure with the transfer valued at $213M. Mack acquired the mezzanine debt on the property from Bank OZK in 2019, according to city records disclosed by Pincus.

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

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.

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

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.