Introduction to Brookfield Offloading Downtown Office Tower
Brookfield Properties offloaded another Downtown Los Angeles office tower for less than the debt tied to the property.
Details of the Sale
Uncommon Developers bought 601 S. Figueroa Street for $210 million, or $201 per square foot, in an off-market sale, according to a spokesperson for Colliers, which represented the buyer.
Significance of the Sale
It’s the biggest commercial sale in Los Angeles County since January last year, but not big enough for Brookfield to break even on $250 million in debt tied to the 52-story tower, which was originally set to mature last July. The Toronto-based landlord won an extension until October, as The Real Deal previously reported.
Implications for Lenders
A source familiar with the sale told TRD that the loan is unimpaired, meaning Brookfield’s lenders — Massachusetts Mutual Life Insurance and the Teachers Insurance and Annuity Association — will collect the full balance. That’s a rare happy outcome for Downtown Los Angeles’ struggling office sector, the source said.
Reaction from Brokers
“This is a landmark sale for Downtown L.A.,” said Colliers’ Mark Schuessler, who arranged the deal for Uncommon in the deal along with colleagues Sean Fulp and Jordan Garcia.
The Figueora Street, also known as Figueora at Wilshire, is 72 percent leased, according to L.A. Business First.
Market Trend
Newmark’s Kevin Shannon, who represented Brookfield in the sale, said in a statement to TRD that the deal is proof that Downtown office space is becoming more valuable in L.A.
“This is an important sale for the DTLA office market,” Shannon said. “Crossing the $200 psf hurdle is a clear sign of improvement. The market has clearly passed bottom.”
Brookfield’s Strategy
Brookfield has been shrinking its Los Angeles office portfolio after getting hit with a series of defaults in the wake of the pandemic.
The company sold 777 South Figueroa Tower, another one of its trophy office towers in Downtown Los Angeles, last year for $145 million, or about half of the outstanding debt on the property, which defaulted in 2023.
Conclusion
The sale of the Downtown office tower for $210 million marks a significant transaction in the Los Angeles commercial real estate market. While it may not have allowed Brookfield to break even on its debt, it signifies a positive trend in the valuation of Downtown office space. As the market continues to evolve, such transactions will be closely watched for insights into the health and direction of the commercial property sector.
FAQs
Q: Who bought the Downtown office tower from Brookfield Properties?
A: Uncommon Developers bought the 601 S. Figueroa Street office tower.
Q: How much was the office tower sold for?
A: The office tower was sold for $210 million.
Q: What is the significance of the sale price per square foot?
A: The sale price of $201 per square foot marks a significant milestone, crossing the $200 psf hurdle and indicating improvement in the Downtown L.A. office market.
Q: What is the current lease status of the office tower?
A: The Figueora Street, also known as Figueora at Wilshire, is 72 percent leased.
Q: How does this sale reflect on the broader commercial real estate market in Downtown Los Angeles?
A: The sale suggests that the Downtown office space is becoming more valuable, with the market showing signs of improvement after facing challenges, including defaults and decreased valuations, in the wake of the pandemic.
