Brookfield’s One Liberty value slashed by $500M

Brookfield’s One Liberty Plaza office tower is set to take a $500 million hit as the private equity giant is buying back a piece of the Financial District building it sold six years ago at a valuation of $1.5 billion.

Brookfield Properties, the majority owner of the 2.3 million-square-foot skyscraper at 165 Broadway, is negotiating to buy a 49-percent stake from partner the Blackstone Group at a valuation of $1 billion, sources told The Real Deal.

That’s a significant drop from the $1.5 billion the 1970s-era tower was valued at in 2018 when Brookfield sold the minority stake to Blackstone, which at the time was one of the most expensive deals ever in the Financial District.

Representatives for Brookfield and Blackstone declined to comment. The deal was quietly marketed for sale by Doug Harmon and Adam Spies at Newmark, who declined to comment. 

The deal is the latest sign of stress for older office buildings, and an acknowledgement from two of the biggest players in the space of just how far values have fallen in the past few years. 

In early 2020, Brookfield and Blackstone were looking to sell the building for $1.6 to $1.7 billion. No deal materialized, though, and the onset of the pandemic and the shift to hybrid work have since seriously impaired office values.

Both Brookfield and Blackstone have had trouble lately with their office buildings.

Brookfield disclosed last month it had defaulted on $784 million worth of loans backing two of its trophy office towers in Downtown Los Angeles. The firm chose not to extend the maturity date on the loans — one on the Gas Company Tower at 555 West 5th Street and the other at 777 South Figueroa Street — when they expired Feb. 9, which triggered the default.

Blackstone’s 10-building, 1.5 million-square-foot Hughes Center office campus in Las Vegas, meanwhile, recently saw its $325 million CMBS loan sent to special servicing after the private equity company said it was unable to fund future monthly payments, Commercial Observer reported.

A spokesperson for Blackstone told the Observer the 2013 investment was “substantially written down beginning three years ago due to the headwinds facing U.S. traditional office.” The spokesperson added that U.S. traditional office represents only 2 percent of the company’s global portfolio.

The company last year bought a 49 percent stake in Brookfield’s One Manhattan West at a $2.9 billion valuation.