Brookfield Takes $100M Hit on Garment District Office

Brookfield chief executive officer Bruce Flatt once referred to the office market as a “tale of two cities.” Today, that city is looking awfully unforgiving to the asset manager.

Brookfield sold the office property at 333 West 34th Street in the Garment District for $150 million, PincusCo reported, using an affiliate in the transaction. The deal was signed at the start of the year and closed a week ago.

The buyer used a limited liability company of its own to obscure its identity, but the entity appears to share an address with another well-known landlord, Taconic Partners, which also owns the neighboring property to the west of the asset. A representative for Taconic, however, denied the firm’s involvement to The Real Deal.

A representative for Brookfield also did not immediately respond to a request for comment from The Real Deal.

The sale of the 287,000-square-foot office property works out to $523 per square foot. That’s a small gain on the price per buildable square foot Brookfield paid New York REIT for the property in 2018, but not on the price per built square foot: Brookfield sold the property for more than $100 million less than the $255 million it paid for the property seven years ago.

Tenants at the 10-story building include the Metropolitan Transportation Authority, Sam Ash Music and Godiva Chocolatier. The MTA leases at least 100,000 square feet, according to CompStak, and is on a lease that isn’t set to expire until 2035.

It’s unclear who brokered the transaction for either side.

The Garment District has been trimming the spirits of office landlords lately. A couple of weeks ago, Bahrain-based Investcorp took a hit on a pair of buildings in the neighborhood, selling them to Josh Rahmani’s Empire Capital Holdings for at least 68 percent below what it paid for them less than a decade ago.

Brookfield’s office luck has been a mixed bag of late, landing big leases but also facing serious distress. This month, the investor positioned itself to buy a $93 million delinquent loan on a distressed office building in San Francisco, which would allow the firm to ultimately take control of Vanbarton Group’s 22-story property.

— Holden Walter-Warner