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Brookfield In Refinancing Talks On £670M London Tower Ahead Of January Maturity

Brookfield's Citypoint tower

Canadian investment giant Brookfield is in talks with lenders about a strategy to deal with the upcoming maturity of a London office tower where values have dropped. 

Brookfield is in dialogue with the servicer of a loan secured against the Citypoint office tower in the City of London, an investor report circulated to bondholders says. 

The tower was revalued at £670M in March, a 10% drop from the previous value of £740M. City office values have fallen further since then, with sales of assets like Lion Plaza resetting the mark.

Citypoint is a 706K SF, 35-storey tower that was built in 1962 and remodelled in 1998. The building has a £368M senior loan and a £92M mezzanine loan secured against it. That gives the building a loan-to-value ratio of 55%, or 68% if the mezzanine debt is factored in. 

Brookfield bought the building for £561M in 2016, and the senior loan from Morgan Stanley was securitised in 2018. 

The building was 18% vacant as of July, a report to bondholders from loan servicer Mount Street said. The annual rent is £32M, up £2M from a year ago, as rent-free periods have expired. The weighted average unexpired lease length is 7.3 years to tenants such as law firms Simpson Thacher & Bartlett and Simmons & Simmons.

“The servicer is in regular discussions with the borrower regarding the final maturity date in January 2024,” Mount Street said in the investor report.