October 27, 2025 by Emily Wishingrad and Mike Phillips

Behind Brookfield's Big Losses On U.S. Office And Its Plan To Speed Up Sales

At the end of the month, six 1970s- and ’80s-era office buildings in the Maryland suburbs are scheduled to be auctioned off at a foreclosure sale. 

They’re half of a 12-building office portfolio that a Brookfield fund purchased in two tranches in 2016 and 2017 and secured a $223M loan on in 2018, two years before the office market took an unprecedented turn for the worse. 

The nondescript blocks may not be the most glamorous, and the deal may not have been Brookfield’s largest. But they represent the latest in a series of losses for the Canadian colossus that shine a light on the pain felt by owners of most office buildings for the past few years — and the difficulties still to come. 

“It really is a microcosm for what's going on in the bigger office market,” Morningstar Credit Head of CRE Analytics David Putro said.

Photo: Google Maps

An office building in Arlington, Virginia, that Brookfield lost control of in August after defaulting on its loan.

In the decade before the pandemic, Brookfield was one of the largest buyers of U.S. offices, in downtowns and suburbs, red states and blue states. It made big bets on the sector using its own money and that of the investors in its funds, all leveraged with billions in loans. 

Brookfield has ceded control to lenders or sold at a discount assets once valued at more than $3B combined in the past three years, a Bisnow analysis found, and it has seen even more written down in value as the market decided that many office properties are toxic.

“They were more opportunistic. They were taking risks on office assets,” said John Kevill, who previously led U.S. capital markets for Avison Young before launching his own firm. “It’s almost simple math: If you took risk on office assets anytime after 2015, generally, the current valuations would put you below debt levels. It’s almost that simple.”

One of the world’s biggest commercial real estate owners, Brookfield Corp. has $28B of offices on its balance sheet, more than BXP, the largest U.S. office REIT, securities filings show. 

Brookfield Corp. also owns stakes in a large but undisclosed portfolio of office assets via the giant real estate funds managed by Brookfield Asset Management, all part of a $280B real estate empire.

“While a few isolated office assets have faced headwinds, they represent a rounding error in our equity exposure and have no impact on the overall strength of our business,” a Brookfield spokesperson said in a statement. 

Click the arrow on the map below to learn more about Brookfield's office portfolio.

Now, Brookfield is trying to stem the losses from that office portfolio and refinance more than $8B of office debt maturing in the next two years.

Additionally, the company is kicking off a process to sell about $10B of office assets by 2030 — including prominent towers in Manhattan and London — to invest in other parts of its business, Bisnow has learned.

That process will test investor appetite for big office buildings across the globe and go a long way toward completing the transformation of Brookfield from direct investor to fund manager.

After years of slow office sales volumes, the market is starting to turn in its favor, with value declines slowing and investor interest in better-quality offices picking up — London and Toronto lead the way, while major American cities still lag. 

But with the turning of a new page comes residual pain. 

Building A Behemoth

Brookfield got into commercial property in the most Canadian way possible — via hockey.

The Canadian Arena Corp., a forerunner to Brookfield Corp.’s property division, built the Montreal Forum in 1924 and owned both the stadium and the Montreal Canadiens pro hockey team until it sold the franchise in 1978. From there, the company expanded its real estate business via a mixture of big corporate acquisitions and individual and smaller portfolio deals. 

The majority of Brookfield’s office assets are owned on the balance sheet of Brookfield Corp., a listed company that also invests in sectors like infrastructure, power, insurance and private credit. 

Brookfield Asset Management, a separate company in which Brookfield Corp. owns a majority stake, also manages real estate funds with a total value of $280B. Brookfield Corp. also invests in those funds. 

Those acquisitions meant that as the pandemic hit, Brookfield Corp. had become the biggest owner of office properties in the world. At the start of 2020, its empire spanned 136 office assets across the world, totaling 93M SF and valued at about $33.5B, including its share of joint ventures, quarterly reports for its Brookfield Property Partners division show. 

Its share of the office assets in BAM’s funds brought its total holdings in the sector to more than $41B. 

But that portfolio has shrunk significantly over the last five years. 

The value of the office portfolio on Brookfield Corp.’s balance sheet fell to $28B by June, spread across 117 properties totaling 68M SF. The decline was brought about by a combination of sales, value write-downs and handing assets back to lenders.

The 37M SF that is consolidated on its balance sheet is 84% leased on average, and the 31M SF that isn’t consolidated is 89% leased.

The company no longer breaks down its investment in funds by sector, but it certainly has some office exposure, particularly from bets made as lockdowns receded. 

Its fourth opportunity fund, the $17B Brookfield Strategic Real Estate Partners IV, made a big bet on the sector, buying three European office REITs in Germany, Belgium and Ireland for a combined $7B in 2021 and 2022. It has since refinanced $5B of debt secured against the three companies. 

The fall in value in its office assets has slowed in recent quarters, but not stopped — its balance sheet office portfolio fell in value by $200M in the quarter ending June 30, accounts show. 

And while Brookfield flagged in a presentation in September that it had completed $16B of financings in the previous 12 months, it still has a big wall of office debt maturities to climb. As of June, it had $2.8B of office debt coming due in 2025 and $5.3B in 2026. It said in its latest quarterly filing that it isn’t paying interest on 3% of its overall $33B debt pile. 

It is now in the process of securing close to $2.5B of debt against 660 Fifth Ave. and Five Manhattan West in Manhattan.

“Brookfield’s office business is built around some of the best buildings in the world — trophy and Class A assets that command record rents and are virtually fully leased to blue-chip tenants,” the company’s statement said. “Our enduring strategy of owning and operating premier properties in leading markets has proven resilient and successful through cycles, delivering an IRR of over 20% through our opportunistic real estate investments since inception.”

Big Bets Gone Bad

Brookfield has suffered from the same devaluations that have washed across the office market — just the numbers are bigger, because it bought bigger. 

Brookfield Asset Management was the fifth-biggest buyer of U.S. offices in 2017, with acquisitions totaling more than $2B, and it jumped to the top spot in 2018 with well above $6B, MSCI data shows.

“The vulnerability that any investor has around the office market right now is if you had these legacy investments you did right before the pandemic, everything has changed in terms of how tenants are thinking about their use of space, and how that then impacts the income potential for the assets,” MSCI Research and Development Executive Director Jim Costello said. 

The decline in U.S. office values over the past half-decade has been stark. Forty-six percent of all office buildings sold between the beginning of the year and July traded at a discount, according to Yardi Matrix, compared to 20% in 2021. From the spring 2022 peak to November 2024, office values fell by 37%, according to Green Street. 

“Office properties have just been hit so hard in value,” Kevill said. “I don't think anybody foresaw the effect that the pandemic would have on how people utilize their offices, and the subsequent change in the math has been significant.”

Brookfield’s strategy was to use its significant capital to invest in well-located office buildings that it could buy below replacement cost and use its management expertise to boost their performance, Kevill told Bisnow.

“They had a focus on buying existing assets where their scale and expertise could provide a real business,” he said. “They did a lot of it, and because they had such scale, they were able to do a lot of it. And clearly some of those deals are challenged.”

In 2017, Brookfield purchased Houston Center, the city’s largest office complex and its abutting retail center, for $875M. It handed the 4.6M SF complex to its mezzanine lender and a new partner this spring.

Photo: Bisnow/Maddy McCarty

In 2018, BAM acquired Forest City Realty Trust, including its debt and 6.3M SF of office, for $11.4B.

It now faces foreclosure on at least one of Forest City's old buildings, a 19-story tower in Downtown Brooklyn, after it failed to pay the $133M it owed when the loan matured in September 2023.

A $305M bet Brookfield made on a 1.4M SF Chicago skyscraper in 2018 went sour when it landed in foreclosure in 2022 then failed to pay off the $250.5M in outstanding debt when it matured in the fall of 2023. The property at 175 W. Jackson Blvd., which is more than half-vacant, according to JLL marketing materials, is now reportedly near a sale.

Meanwhile, the six suburban Maryland properties going to auction at the end of the month stem from two separate acquisitions Brookfield completed in the prepandemic years: its 1.2M SF acquisition of a Washington Real Estate Investment Trust office portfolio in 2016 and a 2017 acquisition of a 1.1M SF TA Realty office portfolio.

In 2018, it bundled 12 assets from those portfolios, refinanced them and securitized the loan. Two other buildings in that CMBS portfolio were foreclosed this summer: one in Arlington, Virginia, and another in Alpharetta, Georgia, Bisnow first reported.

The loan, which matured in August 2023, has a balance of $161.4M, according to Morningstar.

“Looking back, in hindsight, was 2016, ’17, you know, the opportune time to buy suburban office? Probably not,” Morningstar's Putro said. 

“Obviously, there's a concentration of these Brookfield properties, but there are a number of other borrowers with a concentration as well that are sort of in the same boat,” he added.

RFR acquired the ground lease for the Chrysler Building for $150M in 2019, but it fell behind on rent payments and lost control of the landmark tower in January when a judge approved its eviction. It had at least a dozen loans, mostly tied to office buildings, in distress at one point last year. 

Last year, Shorenstein Properties was facing nearly $1B in troubled debt on its portfolio and was forced to hand Capella Tower, Minneapolis' second-tallest office building, to its lender, after buying it for $255M in 2018.

Blackstone also handed over the keys to a Manhattan tower it bought for $605M in 2014. The CMBS special servicer sold the $308M loan tied to the building for $200M, triggering the first loss for investors in a AAA-rated CMBS loan since the Global Financial Crisis.

But the number of properties Brookfield has lost stems from the fact that it, like many of its private equity peers in real estate, operates by taking down large swaths of properties at a time, through portfolio acquisitions or acquiring entire companies.

“There's only so many places that have large assets that you can put a bunch of money to at once,” Costello said.

“There are groups like Brookfield, groups like Blackstone, BREIT, they've just got so much capital coming in, they tend to do a lot more in the way of these entity-level deals or big portfolio deals where they're buying whole companies at once or big portfolios of assets at once.” 

Billions In Sales Coming Soon

The culling of Brookfield’s office portfolio is just getting started. 

The company last month broke down its plans to sell billions of dollars in real estate in a presentation to investors, ramping up sales it has signaled for the last five years as the market for office deals begins to heat up. 

Photo: Google Maps

One Liberty Plaza in Manhattan is part of one of the assets Brookfield plans to sell in the coming years.

Brookfield is looking to sell a significant portion of the real estate holdings on its balance sheet to invest in other parts of its business, turning from an investor that uses its own money to a fund manager using that of institutional investors from across the world. 

Kevin McCrain, a managing partner in Brookfield's real estate group, told investors the firm wants to sell more than $45B of real estate from its balance sheet over the next five years, and the accompanying presentation shows that at least $10B of that — and possibly more — is offices.

It splits its portfolio into three buckets: super core, core-plus and value-add. It wants to sell the whole of the latter two portfolios, it told investors, which contain about $6B to $8B of offices — “monetize the value over the plan period,” as it puts it in the presentation.

“Across sectors, Brookfield continues to deliver strong returns, maintain disciplined capital management, and remain exceptionally well-positioned to capitalize on opportunities ahead,” Brookfield said in a statement. 

The presentation shows that in the next few years, major assets like One Liberty Plaza in Manhattan, the former U.S. Steel Building valued at $740M, and the newly constructed One Leadenhall office tower in London, valued at $909M, will likely be coming to the market. 

Brookfield also wants to sell stakes in some of its super core assets, although it doesn’t specify which ones. That would leave it with a portfolio with an equity value of about $18B and a total value of a bit less than $35B, compared with a current value of about $80B — figures that include investments in malls and real estate funds as well as offices. Brookfield’s real estate assets have an average loan-to-value ratio of about 45%. 

Office assets in that super core portfolio include Brookfield Place — both the Manhattan and Toronto versions — Manhattan West, Canary Wharf and 100 Bishopsgate in London and Potsdamer Platz in Berlin. 

In selling those core-plus office assets, it will be fighting through the mud of a stagnant investment market, especially for offices. Like all big real estate investors, Brookfield has seen the pace of sales slow over the past three years as rising interest rates depress values and volumes. 

The company touted an uplift in sales earlier this year, but that was primarily residential-led portfolios being sold from the funds managed by BAM. Brookfield Corp. has sold about $1B of portfolios that have some element of office over the past 18 months, company filings show. 

Liquidity is returning to the office market, but slowly and spread unevenly about the globe. Offices were the biggest asset class in Europe over the two years ending in June, data from Colliers shows, but still lag way behind industrial and multifamily in the U.S. over that period. 

But values across the board have fallen drastically, a fact that Brookfield will have to reckon with when selling — MSCI’s index shows that central business district office values have declined 52% from the peak of pricing, and for older, subprime assets, the decline is even more severe.

There are some buyers willing to take down older, subprime assets, but they expect steep discounts for the gamble.

“Private investment is taking a chance on this stuff, part of it because they can, they can get it at a discount that's big enough for them to take the risk of doing all the stuff they need to, to swing the hammers to get these to be productive again,” Costello said.

One of the biggest buyers of Brookfield's assets in the past 18 months has been Brookfield itself, through Brookfield Wealth Solutions, an insurance company it owns. That division bought a stake in One Liberty Plaza, the Financial Times reported. The same division bought an 8% stake in the Brookfield fund that bought the three European office REITs. 

With much of its office exposure on Brookfield Corp.’s balance sheet, the pain in its office portfolio doesn’t seem to have hurt its fundraising efforts. Brookfield Strategic Real Estate Partners had raised $16B as of May. The BAM-run vehicle, which is targeting distressed assets and company acquisitions, is on track to be the biggest real estate strategy in its history.

“They still remain an investor with tremendous scale, and the market has spoken, right?” Kevill said. “They're systematically able to raise large amounts of capital for future deals.”