Brookfield Properties is launching foreclosure proceedings onTishman Speyer's office portfolio in the Washington, DC area,according to a recent article in the Wall Street Journal.

|

Tishman, according to the report, is pushing back, with plans torestructure its $570 million in debt for the 20-building portfolio.DAI could not reach the firm for comment by press time. However, aTishman spokesperson told the WSJ that the company is confident itcan implement a restructuring to maintain its ownership.

|

Tishman has not settled on an exact strategy as to how it willdo this, a source tells DAI. However, it is going to happen withinthe next two months. The company issued a general statement thataccused Brookfield of trying to pressure its ownership group bystarting the foreclosure proceedings.

|

"The portfolio has terrific assets and we are not surprisedBrookfield wants them, ' the statement noted. "That said, we havethe funds needed to restructure the portfolio debt and we'reconfident that we can implement a restructuring that will maintainour partnership's ownership:'

|

In February, Brookfield Properties acquired the debt associatedwith Tishman's DC portfolio. Brookfield was reported to have boughtthe debt in a loan-to-own structure that would give the companysignificant leverage in the restructuring process, possiblyallowing it to buy assets if they are auctioned off in abankruptcy.

|

Last summer, Tishman defaulted on the 6.3-million-square-foot,28-asset CarrAmerica portfolio, which it holds in a partnership,after acquiring it in 2006 for $2.6 billion. The partnershipviolated covenants on $200 million in its revolving credit line.The joint venture term loan and revolver debt totals approximately$570 million. Tishman tried to negotiate with lenders butultimately could not reach an agreement.

|

Tishman owns a number of properties in the DC area, some ofwhich are not part of this portfolio, including InternationalSquare, Presidential Plaza and 1775 Pennsylvania Ave.

|

So far DC has remained relatively insulated from the problems ofdistressed commercial real estate, says Greg Leisch, CEO of DeltaAssociates.

|

The company just reported that the total value of distressedcommercial real estate nationally has reached $187.4 billion,including properties

|

in distress, foreclosure and lender REO. The numbers, which havebeen compiled from Real Capital Analytics, represent an increase of10%, or $17.3 billion, since Deltas January report and 33%, or$46.9 billion, since November 2009. One of the reasons DC distresshas remained low is that a significant portion of the areasdistressed assets-37%-is largely concentrated in four companies:General Growth Properties, Opus, Tishman Speyer and BroadwayManagement.


GlobeSt.com News Hub is your link torelevant real estate and business stories from other local,regional and national publications.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.