Los Angeles office tower dumped by Brookfield faces foreclosure sale

AN OFFICE tower in downtown Los Angeles is facing foreclosure a year after the owner, an affiliate of Brookfield Asset Management, walked away from the building.

A notice of trustee’s sale for the Gas Company Tower, located at 555 West 5th St, was filed Mar 21 with the Los Angeles County Recorder’s office, setting the stage for a foreclosure sale as soon as 90 days after the filing.

The foreclosure comes as the value of office buildings has plunged amid higher vacancies. Elevated interest rates have also weighed on prices, making it difficult for building owners to refinance debt.

The price for office space in downtown Los Angeles is averaging about US$141 a square foot (US$1,517 per square metre), according to a note on Wednesday (Mar 27) by Barclays.

A nearby Brookfield tower at 777 S Figueroa is being sold for about US$145 million, roughly 50 per cent less than the outstanding debt on the property.

The Gas Company Tower was appraised in 2020 at US$632 million but is now worth closer to US$200 million, based on the US$141-square-foot price cited by Barclays.

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The building has roughly US$465 million in loans, including US$350 million in commercial mortgage backed securities and two mezzanine mortgages for US$65 million and US$50 million.

Pacific Investment Management (Pimco) is the largest holder of the most senior debt, a US$167 million slice of the CMBS.

A Pimco spokesperson declined to comment. Brookfield did not immediately reply to a request for comment. BLOOMBERG