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Canadian investor Brookfield has laid out a proposal to extend and restructure a loan secured against one of the largest office towers in the City of London.
Brookfield is seeking to extend £460M of debt secured against the 704K SF Citypoint office building. That comes the same week the building's second-largest tenant said it would leave in 2030.
Brookfield acquired Citypoint in 2016 for £607M by buying into its debt after it previously went into receivership.
New debt, a £368M senior loan that was securitised and a £92M mezzanine loan, was put in place in 2018. That senior loan was meant to mature in January 2022 but was extended three times, ultimately to this month, to buy more time for a sale or refinancing.
This week, Brookfield asked bondholders to extend the maturity of the debt to 2028 to give it more room to lease up space and improve the value, according to a notice to bondholders that own the senior debt.
In exchange, Brookfield will pay an increased interest rate margin. It will also take out a £22M loan to pay for leasing and other fees at an interest rate of 15%. That loan will be provided by another Brookfield entity.
The building was valued at £670M in March 2023, the report to bondholders says. Yet when it was put up for sale last year, bids came in below the £460M level of the debt, Bloomberg reported.
The building is 95% leased, bondholder reports show. But this week, law firm Simmons & Simmons said it is leaving in 2030 and, like many tenants, heading to a refurbished office elsewhere in the City. Occupying 133K SF and accounting for 20% of the rent roll, its departure will increase vacancy in the building, built in 1967 and refurbished twice since 2001.
Another amendment to the loan involves a request to modify change-of-control provisions, which would allow it to transfer the building to another entity owned by Brookfield without triggering any defaults.
In the past two years, Brookfield has sold $2.5B (£1.9B) of assets to an insurance company that it owns.
A bondholder vote will be held on the proposals on 16 April. Brookland Partners is advising Brookfield on the restructuring.
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