After defaulting on $1.1 billion worth of debt related to three office buildings in downtown Los Angeles, Brookfield now faces the risk of defaulting on another $400 million in loans related to a stand-alone office building in the city’s central business district.
According to a report from Fitch Ratings, Brookfield has an “increased risk of default on maturity” of its commercial mortgage-backed securities obligations related to its 1.4 million-square-foot Bank of America Tower at 333 South Hope Street.
Fitch Ratings said the originators of the Bank of America Plaza loan — Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup — had reported debt losses.
The building is the latest office domino owned by Brookfield to swing, as rising interest rates sent debt payments at alternative investment firms soaring, while office occupancy lagged due to remote work.
Since February, Brookfield has lost two Los Angeles towers — the Gas Company Tower and EY Plaza — to court-appointed receivers and is in technical default on the 777 Tower, though it is still paying debts on the latter.
But Brookfield’s troubles at U.S. Bank Plaza have more to do with relocating tenants and falling revenue than rising rates. According to an SEC filing, the building’s CMBS debt has a fixed interest rate of 4.05%, meaning it is currently immune to rising interest rates.
The building’s CMBS debt doesn’t come due until September 2024, giving Brookfield more than a year to resolve any financial issues, according to SEC filings.
Brookfield did not respond to a request for comment, but said the 777 Tower and Gas Company Tower defaults represent a “very small portion” of the company’s portfolio.
On the other side of the country, Brookfield is struggling with some $1 billion worth of malls in a swath of land stretching from New Jersey to Virginia.
