The debt associated with Brookfield Asset Management’s portion of the New York Times Building has entered special servicing, according to a report by Commercial Observer and disclosures from Morningstar Credit. The $515 million commercial mortgage-backed securities (CMBS) loan is set to mature next month.
Brookfield owns the upper half of the 52-story office tower at 620 Eighth Avenue, covering floors 29 to 51, which span about 740,000 square feet and serve as collateral for the loan. The transfer into special servicing was requested by Brookfield itself.
A spokesperson for Brookfield stated, “We are taking the first step in opening a structured, good-faith dialogue with our lenders to determine the best outcome for all stakeholders,” and added that exposure from this non-recourse loan is “immaterial” to its real estate platform.
In February, Fitch Ratings downgraded its outlook on Brookfield’s stake in the Midtown West building to “negative.” Brookfield refinanced its portion of the property in 2018 with a $635 million mortgage provided by Deutsche Bank, Bank of America, Barclays Capital Real Estate Inc., and Citi Real Estate Funding Inc. Additional layers of debt include a $120 million junior mortgage and a $115 million mezzanine loan. According to Morningstar, these additional loans complicate potential refinancing options. Fitch noted that Brookfield has already extended its CMBS debt five times since 2020 and cannot extend it further.
Tenant turnover has been an issue for Brookfield in recent years. Law firms Goodwin Proctor and Osler Hoskin & Harcourt as well as asset manager ClearBridge Investments have left their spaces; however, those vacancies were subsequently filled. In September, law firm Covington & Burling announced plans to vacate 200,000 square feet as it moves operations to Hudson Yards. Despite this pending departure, the building remains fully occupied at present.
Cash flow from the property reached $42.3 million last year—about 14 percent below what was underwritten five years ago.
