Brookfield Loses Office Properties In Northern Virginia, Georgia
A Brookfield fund has lost two office assets from a 12-property suburban office portfolio that it refinanced in 2018, and the rest of the properties are slated for foreclosure.
The portfolio spans 1.8M SF, with nine buildings in the D.C. metro area, two in Florida and one in Georgia. The portfolio was 53% leased as of March, according to Morningstar Credit’s database.
Brookfield’s fund, Brookfield Strategic Real Estate Partners II, obtained a $223.4M senior loan and two mezzanine loans in April 2018. The senior loan was originated by Morgan Stanley and securitized as a CMBS loan.
The borrower defaulted on the CMBS loan in April 2023, and it was sent into special servicing. Its current balance is $161.4M.
And now two of the properties — one in Arlington, Virginia, and one in Georgia — have been transferred to the loan’s trustee, Wells Fargo, according to the special servicer commentary recorded in Morningstar and other property record databases.
A Brookfield spokesperson said in a statement to Bisnow the assets were “written off in 2023, placed with a receiver, and are immaterial to our global real estate business, which remains strong - delivering nearly $15 billion of realizations this year alone.”
In February, the special servicer tagged 10 other properties in the portfolio as “in foreclosure,” according to Morningstar.
Brookfield declined to comment on the other 10 properties. Wells Fargo didn't respond to a request for comment. KeyBank, the loan’s special servicer and master servicer, declined to comment.
The fund lost the Arlington Square property in Ballston, a 140K SF building, on June 18, Arlington property records show. A deed transfer to Wells Fargo for $14.9M has the transaction marked as “1,” meaning it was either a “Foreclosure, Auction or Bankruptcy.”
The property was built in 1998, and Brookfield’s fund bought it in 2017, part of a six-property portfolio it acquired from TA Realty for $107M. Arlington Square was fully empty at the time, having been vacated by its previous full-building occupant, the U.S. Fish and Wildlife Service, in 2014.
The 2017 acquisition price was $33.5M, Arlington property records show.
The Brookfield fund lost the other property in May, a 103K SF office building in Alpharetta, Georgia. Wells Fargo took over the 1990s-era property at 1355 Windward Concourse for $7.2M, according to the Reonomy property database.
The fund bought the Windward Concourse property through the same portfolio acquisition in 2017. Fulton County property records show the acquisition price was $10.5M.
Of the portfolio's 10 other properties, seven are in Montgomery County, Maryland, another is in Alexandria, Virginia, and two are in Orlando.
The total portfolio has seen a steep drop in its appraised value since origination. In July 2018, the 12 properties were valued at $361.6M. As of March, they were appraised at $121M.
