Brookfield's EY Plaza Goes to Receivership
Colliers teams have been tapped to handle two of DTLA REIT's trophy towers.
For the second time in barely a month, a trophy tower owned by Canadian real estate giant Brookfield’s DTLA REIT in Los Angeles has been placed in receivership.
The same receiver that was appointed by the Los Angeles Superior Court to oversee the receivership on the Gas Company Tower at the end of last month—Gregg Williams of Trident Real Estate—was again tapped by the court this week to handle the receivership for EY Plaza, a 41-story tower that is the headquarters for accounting giant Ernst & Young.
Colliers announced Thursday that Williams has awarded it the exclusive leasing and property management assignment for the 968K SF tower at 725 S. Figueroa St. Williams also tapped Colliers to market the sale of the Gas Company Tower.
Earlier this month, Trepp reported that Brookfield defaulted on a $275M loan backed by EY Plaza. The loan was originated in 2020 by Morgan Stanley and Wells Fargo and then sold to CMBS investors. The delinquent CMBS package includes a $220M and a $35M mezzanine loan.
According to the Brookfield DTLA REIT’s annual report, EY Plaza was 23% vacant at the end of the year. Expenses for T.I. and landlord operations increased 200% last year and debt service on the CMBS loan increased to $1.4M per month from the March 2022 level of $655K per month, the company said.
The 54-story Gas Company Tower was placed in receivership by the Superior Court after CMBS lenders Citi Real Estate Funding and Morgan Stanley filed a lawsuit asking the court to appoint a receiver to pave the way for the sale of the property, in lieu of a bankruptcy proceeding.
In February, Brookfield defaulted on two senior loans backed by the Gas Company Tower totaling $350M in debt. The landmark tower, headquarters for the Southern California Gas Co., is located at 555 West 5th Street.
According to court filings, the REIT failed to pay off the loan by the maturity date of Feb. 9 and it failed to pay an advance of $3.6M in property taxes by April 10. Brookfield also defaulted in February on $319M in loans for 777 South Figueroa St., also known as the 777 Tower.
“EY Plaza is one of the best office buildings in all of Los Angeles, and its value is worth protecting,” Sean Fulp, Head of Office Capital Markets, US Southwest, Colliers, the lead advisor for the team handling the receivership estate, said in a statement.
“We will not sit back and wait for the market to determine its fate. The building is now very well capitalized, and we have a highly skilled team of management and transaction professionals to ensure it remains one of the premier options for tenants in downtown LA,” Fulp said.
A year ago, Brookfield’s Downtown Los Angeles office portfolio encompassed 8M SF, including four of the city’s highest-profile trophy towers. The company’s DTLA REIT, formed in 2013 after Brookfield’s $2B acquisition of office tower owner MPG Office Trust, has been considered a bellwether for the DTLA office market in the past 10 years