One of the largest office loans to hit special servicing last year has been modified and extended, giving Brookfield Properties two more years of breathing room.
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The $835M CMBS loan backed by One New York Plaza was transferred to a special servicer on Dec. 18, ahead of its scheduled maturity date on Jan. 9. The collateral is a 50-story, 2.5M SF office tower in Manhattan’s Financial District.
The maturity date has been extended to Jan. 9, 2028, according to a report from bond rating agency KBRA. As part of the workout, Brookfield paid down the principal balance by $25M and was required to deposit $20M into a reserve to fund future leasing costs.
The loan comes with two one-year extension options, given there is no default. However, those extensions come with new requirements.
For each extension, Brookfield must deposit another $20M into the leasing reserve and replace the loan's interest rate cap. Additionally, a cash flow sweep would come into play throughout the extension period, ensuring that funds are used to pay down the debt.
Brookfield didn't immediately respond to Bisnow’s request for comment.
Brookfield originally refinanced One New York Plaza in 2020. The loan was originated by Wells Fargo, Goldman Sachs and BMO Harris Bank. The debt replaced a $750M loan provided by Wells Fargo in 2016, Commercial Observer previously reported.
The office tower was constructed in 1970 and renovated in 1995, according to Brookfield's website.
Like many other office buildings, One New York Plaza has struggled with a decline in occupancy. The tower was fully occupied in 2022, but it was down to 83% as of a December KBRA report.
In 2022, Revlon — the building’s fifth-largest tenant when the loan was originated — vacated, according to KBRA. In 2023, Morgan Stanley reduced its footprint from 1.3M SF to 1.1M SF.
A Nov. 11 appraisal valued One New York Plaza at less than $1.1B, or $415 per SF, down from $1.5B, or $596 per SF, when the loan was issued.
Despite the 30.5% drop in value, Brookfield has never been delinquent on a payment, Morningstar Credit Analytics Associate Managing Director David Putro told CO after the loan was sent to special servicing in December.
KBRA said in its report that it doesn't expect a loss on the asset.
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