A distressed Brookfield-owned downtown office tower is on the market, according to an Eastdil Secured offering memorandum viewed by The Real Deal.
The materials do not include an asking price, only an offering to purchase the mortgage loan connected to 333 South Grand Avenue, which includes the office building, called the Wells Fargo Center — North Tower, and an adjacent three-story retail asset called the Halo.
The 1.4 million-square-foot office building is only 61 percent leased; the retail atrium is 63,000 square feet and only 35 percent leased. The sister tower is not included in the deal.
The roughly $506 million debt on the Wells Fargo Center — North Tower is in default, according to a financial report for the three months ending March 31. The debt amounts to $346 per square foot.
That distressed debt includes a mezzanine loan from Oaktree Capital Management, which Brookfield owns a controlling interest of and is set to wholly own. Neither Eastdil nor Brookfield immediately responded to requests for comment.
The property is not in the hands of a receiver, unlike other downtown offices once owned by Brookfield.
EY Plaza was placed in receivership after debt default. A $130 million deal to sell it collapsed, and Colliers marketed the $275 million note tied to the office tower. That note is expected to trade at a massive discount.
Another Brookfield-owned office building traded earlier this year for $210 million, which wasn’t enough to cover the $250 million debt tied to it.
The Wells Fargo Center — North Tower recently lost an important tenant: Oaktree Capital Management, headquartered there for decades, relocated and left about 215,000 square feet empty. Gibson, Dunn & Crutcher and Wells Fargo Bank hold the next largest leases.
Brookfield purchased the Well Fargo Center, plus other skyscrapers for $430 million from MPG Office Trust in 2013; it assumed $2 billion in debt, too. Brookfield became the dominant office landlord in the financial district then, but that was before the pandemic and slow lending dealt devastating blows to the market.
The Eastdil marketing materials tout a renewed demand for office space as companies call workers back to their desks, but the downtown office vacancy rate is still 33.3 percent.
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