Brookfield lines up $465M refi for Gas Company Tower in DTLA

Southern California Gas Company HQ occupies nearly 500K sf

Brookfield Property Partners CEO Brian Kingston and the Gas Company Tower at 555 West 5th Street (Brookfield)
Brookfield Property Partners CEO Brian Kingston and the Gas Company Tower at 555 West 5th Street (Brookfield)

Brookfield Property Partners is continuing its streak of big office refinancings with another CMBS loan in Downtown Los Angeles.

Citi Real Estate Funding and Morgan Stanley are providing a two-year, $350 million floating-rate loan for the 54-story Gas Company Tower at 555 West 5th Street, according to a Moody’s report. The lenders, along with SBAF Mortgage Fund, are also providing $115 million in mezzanine debt. The deal is expected to close on Feb. 5.

Brookfield acquired the 1.4 million-square-foot building in 2013 as part of its $2 billion acquisition of MPG Office Trust — a deal that made it the largest office landlord in Downtown L.A. The new financing replaces previous CMBS debt originated in 2016, which was set to mature this August.

Major tenants at the tower include the eponymous Southern California Gas Company, whose headquarters occupies 469,000 square feet at the building; law firms Sidley Austin and Latham & Watkins; “Big Four” accounting firm Deloitte, whose logo is affixed to the top of the building; and WeWork.

Occupancy dipped from 87 percent to 76 percent last year, following a downsizing on the part of Southern California Gas after two lease expirations. Rent collection has remained strong through the pandemic, averaging 99.6 percent from March through November. Brookfield declined to comment.

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The entity that owns the Gas Company Tower, as well the rest of Brookfield’s Downtown L.A. portfolio, is a closed-end fund known as Brookfield DTLA Holdings LLC. Brookfield has a 47-percent stake in the fund while the remaining interest is held by two sovereign wealth funds and a pension fund.

The Gas Company Tower will mark the fifth CMBS office refinancing Brookfield has secured since last fall, following One Manhattan West, Ernst & Young Plaza in DTLA, the Grace Building in Midtown Manhattan, and One New York Plaza in Lower Manhattan.

Amid the current low-interest-rate environment, the landlord has also secured refinancings for retail properties like the Oakbrook Center near Chicago and the Mall in Columbia between Washington, D.C., and Baltimore — while also signaling that it is ready to give up the keys for several of its shopping centers in secondary markets.

This month, the real estate firm’s parent company Brookfield Asset Management announced a proposal to buy the shares of Brookfield Property Partners that it does not already own at a value of $16.50 per share, or $5.9 billion.