On a chilly Halloween afternoon, a crowd of two dozen huddled on the front steps of the Montgomery County Circuit Court building — talking, jotting down notes and phoning their business partners.
They had gathered for a foreclosure auction for six 1970s- and 1980s-era office buildings totaling 1M SF in the Maryland suburbs: four in Rockville and one each in Silver Spring and North Bethesda. The properties were owned by Brookfield and represent the latest in a string of distressed situations the investment giant has faced in its office portfolio.
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The office buildings were offered up one after another in 10-minute intervals, with Alex Cooper Auctioneers' Paul Cooper conducting the proceedings.
All of the buildings went to the lender except for the final property offered up. Montrose Metro I, a 120K SF office building on Rockville Pike in North Bethesda, sold for $17.9M after the lender started with an opening credit bid of $7.8M.
The buyer of the 1987-built property declined to identify himself to Bisnow.
The lender was a pool of CMBS investors represented by the trustee, Wells Fargo Bank N.A. Its representative at the auction declined to comment.
Brookfield didn't respond to a request for comment.
A few of the other properties garnered bids from the crowd, but for each one, the lender was willing to go higher. Ultimately, the lender took over the buildings at 962 Wayne Ave. in Silver Spring and 51 Monroe St., 11300 Rockville Pike, 600 Jefferson Plaza and 6110 Executive Blvd. in Rockville.
McLean-based Elm Street Development tried its hand at acquiring the 1970-built Executive Boulevard building. Jason Wiley, a vice president who leads the firm's acquisitions and development in the region, bid against the lender up until $12M, which he told Bisnow was its limit. The lender took the 206K SF property for $12.5M.
Wiley said the firm would have transformed the property into affordable housing — likely through demolition. Nearby, Tri Pointe Homes is building townhomes, and he believes the county would have wanted to see it redeveloped into housing.
The six properties up for auction Friday were half of a 12-property portfolio that a Brookfield fund purchased in two tranches in 2016 and 2017. In 2018, it securitized its $223.4M senior loan as a CMBS.
The five properties that went to the lender were from a 2016 office portfolio acquisition from Washington Real Estate Investment Trust.
The North Bethesda property that sold, Montrose Metro I, came from a 2017 office portfolio acquisition from TA Realty.
Brookfield defaulted on one of its loans tied to the portfolio in April 2023, and the CMBS loan was transferred to special servicing.
Brookfield lost two other office buildings in the portfolio, one in Alpharetta, Georgia, in May, and another in Arlington, Virginia, in June, Bisnow first reported.
