After a major refinancing on the East Coast, Brookfield Property Partners turned to the West.
A month after tapping the CMBS market for a huge refi of One Manhattan West in New York City, the company also secured a $305 million financing package for its Downtown Los Angeles office building, Ernst & Young Plaza, at 725 South Figueroa Street.
The 940,000-square-foot L.A. office tower is 78.4-percent leased to 43 tenants, according to the current rent roll as reported by Kroll Bond Rating Agency. The top five tenants alone account for more than half of the base rent and 38 percent of the space.
The namesake tenant, Ernst & Young, now occupies about 121,000 square feet. It pays $28.47 per square foot, slightly below the building average of $29.56 per square foot.
That’s according to ratings documents associated with the securitization — a single-borrower deal dubbed BFLD 2020-EYP — which provide a detailed, up-to-date look at the building’s rent roll and finances.
Brookfield acquired the 41-story tower in 2006 as part of its acquisition of Trizec Properties and its 44-property portfolio, which valued the building at about $315 million. A spokesperson for the company said it was able to secure favorable financing terms ahead of its existing loan expiry thanks to two new leases and a big renewal at the property.
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The tenant with the priciest lease is the U.S. Secret Service, which pays $38.18 for each of its more than 94,000 square feet. The lease commenced in 2015 and lasts through 2025 with no termination or extension options.
Insurance companies are the most well-represented tenant sector at the property, with 13 firms that account for 28.4 percent of the square footage. Eight legal firms account for another 22.4 percent, while four consulting tenants take up 19.3 percent, according to Kroll.
Recent leasing activity at the building includes a new 16,000-square-foot lease with Clune Construction, a new 25,000-square-foot lease with insurer California Fair Plan, and a 57,000-square-foot renewal with the third-largest tenant, law firm Pillsbury Winthrop, which has been at the property since 1999. All three new leases include at least 12 months of free rent and at least $105 per square foot in tenant improvement allowances.
The building’s occupancy recently declined due to the departure of insurance brokerage Lockton Companies, which relocated to another Brookfield property on the same block, the 777 Tower at 777 South Figueroa Street.
Ernst & Young Plaza and 777 Tower are both part of a larger master-planned complex that was initially developed in 1985, which also includes the Brookfield-owned open-air retail center known as FIGat7th. Brookfield is also developing a 56-story, 780-unit condo tower on the same block, while Mitsui Fudosan America is building a 41-story mixed-use high-rise across the street.