The debt tied to Brookfield Asset Management’s portion of the New York Times Building is going the way of special servicing, but the fine print suggests not all is lost for the owner.
The $515 million commercial mortgage-backed securities mortgage went to special servicing ahead of next month’s maturity, the Commercial Observer reported. The move was disclosed by Morningstar Credit on Monday.
The transfer request was made by Brookfield, which owns the upper half of the 52-story, 1.5 million-square-foot office tower at 620 Eighth Avenue. Floors 29 to 51 span approximately 740,000 square feet and secure the debt in question.
“We are taking the first step in opening a structured, good-faith dialogue with our lenders to determine the best outcome for all stakeholders,” a Brookfield spokesperson told the publication, adding that the exposure from the non-recourse loan is “immaterial” to the company’s real estate platform.
In February, Fitch Ratings downgraded its outlook on Brookfield’s portion of the Midtown West building to “negative.” Brookfield took out a $635 million mortgage to refinance its part of the building in 2018 (the same year it acquired the portion), which was provided by Deutsche Bank, Bank of America, Barclays Capital Real Estate Inc. and Citi Real Estate Funding Inc.
There’s also a $120 million junior mortgage and $115 million mezzanine loan in place, which Morningstar said further complicates the refinancing possibilities. The landlord has already extended its CMBS debt five times since 2020, according to Fitch, leaving no extensions left.
Brookfield has seen an exodus of tenants in recent years, including law firms Goodwin Proctor, Osler Hoskin & Harcourt and asset manager ClearBridge Investments (both those vacancies, however, were filled).
In September, law firm Covington & Burling announced a plan to leave 200,000 square feet behind as it moves to Hudson Yards, leaving a large hole for Brookfield to fill, though the building is fully occupied at the moment.
Cash flow at the building hit $42.3 million last year, approximately 14 percent below the levels underwritten five years earlier.
— Holden Walter-Warner
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