Brookfield Tower Could Enter Foreclosure Over $133M Loan
The property is part of a multi-building office campus in Brooklyn.
After defaulting on $132.7 million in debt associated with an office building in Brooklyn, Brookfield Properties is facing foreclosure on the asset, a 675,000-square-foot tower at 115 Myrtle Ave. Special servicer Rialto Capital Management made a pre-foreclosure filing recently in the New York Supreme Court as a step toward wresting the property from Brookfield and then selling it, The Real Deal first reported.
The asset is part of Brooklyn Commons, a multi-building office campus. In 2018, Brookfield Properties came to own 115 Myrtle Ave. via the acquisition of its previous owner, Forest City Realty Trust.
“115 Myrtle—part of the 2018 Forest City portfolio acquisition that has returned billions in gross proceeds—was written off years ago and is immaterial to our global real estate business, which remains strong, delivering nearly $15 billion of realizations this year alone,” a spokesperson for Brookfield told Commercial Property Executive.
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The loan’s maturity date was Sept. 1, 2023, with at least $132.7 million now due, according to the filing. The CMBS loan dates back to ownership by Forest City, which took out two loans with the same term. The loan has been on the servicer’s watch list since July 2023.
“The Borrower defaulted under the Loan Documents by failing to pay the entire principal, interest, and other amounts due thereunder,” Rialto said in the filing. “To date, (Brookfield) has not paid all of the amounts due.”
Formerly known as MetroTech Center, the entire 12-building, 5.5 million-square-foot office campus was rebranded to Brooklyn Commons in 2022. At the time, Brookfield made renovations to the building, including a new lobby, a cafe and a 40-foot mural.
115 Myrtle Ave., which is virtually all leased, also includes nearly 8,000 square feet of retail on its ground floor. The property, which opens onto Flatbush Avenue in the borough, is in an opportunity zone.
CMBS delinquencies rise: Trepp
A shade over 11 percent of CMBS loans associated with office assets were delinquent at the end of July, according to Trepp. Among all major property types, that is still by far the highest delinquency rate, with retail, multifamily and lodging each between 6 percent and 7 percent.
Overall, CMBS delinquencies are up compared with a year ago. The overall rate for all properties is currently 7.23 percent; a year ago, it was 5.43 percent. Office delinquencies have likewise been creeping up, from 8.09 percent in mid-2024, Trepp reported.
In July, the balance of the top 10 newly delinquent loans totaled more than $2.1 billion, Trepp noted. Altogether, there were 129 loans that became newly delinquent in June, Trepp noted.
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