Brookfield is reaching into its own pocket to refinance a piece of lower Manhattan’s crown jewels.
The Canadian investment manager is nearing an $800 million CMBS loan for 225 Liberty Street, a 44-story, 2.4 million-square-foot office tower that’s part of Brookfield Place, Bisnow reported. Brookfield is contributing roughly $173 million of fresh equity to help refinance a $900 million CMBS loan that dates back to 2016 and comes due this week.
The financing, originated by Citi Real Estate Funding, JPMorgan Chase, Bank of Nova Scotia and Wells Fargo, carries a fixed rate of just under 5.9 percent on a five-year term, according to ratings agency KBRA. That’s a notable step up from the prior loan’s 4.7 percent rate, according to S&P Global, reflecting the higher-cost capital environment facing even the best-in-class office assets.
KBRA pegged the tower’s latest appraised value at $1.3 billion. The building was about 90 percent leased as of November, with Brookfield Properties itself the largest tenant, occupying more than 535,000 square feet.
One uncertainty at the property is Saks Global, which signed a 233,000-square-foot office lease at in 2014, but filed for bankruptcy last month. Its lease runs through 2031, but the company is delinquent on rent and its space is being treated as vacant in KBRA’s loan analysis.
The refinancing comes shortly after Brookfield extended its ground lease with the Battery Park City Authority for the entire Brookfield Place complex through 2119. Brookfield pays the authority about $7 million a year under the lease with scheduled step-ups baked in over time.
Originally developed in the late 1980s as the World Financial Center by Olympia & York, Brookfield Place spans 14 acres and includes office towers at 200 and 250 Vesey Street along with a vast retail concourse.
In a recent investor presentation, Brookfield pegged the complex as its most valuable office holding globally, valuing it at $4 billion within the firm’s $1 trillion portfolio.
Brookfield and its affiliates have remained active in the CMBS market, closing large packages last year at Five Manhattan West and 660 Fifth Avenue.
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