Brookfield’s One New York Plaza Hits Special Servicing

It wouldn’t be the end of 2025 without one more office distress scenario playing out in Manhattan.

The debt backing Brookfield’s One New York Plaza was shipped to special servicing recently, the Commercial Observer reported. The goal of the maneuver is to aid Brookfield in modifying the $835 million CMBS loan backing the 2.5 million-square-foot tower at the intersection of South and Whitehall streets in the Financial District.

It’s unclear what prompted the transfer of the loan, but time is of the essence, as it’s set to mature on Jan. 9. Brookfield has never been delinquent or late to make a payment on the debt.

Wells Fargo, Goldman Sachs and BMO Harris Bank provided the loan in 2020, refinancing a $750 million debt issued by Wells Fargo four years earlier. The refinancing included three-year extension options.

But cash flow and occupancy both declined at the 50-story tower in recent years. The loan was underwritten with an assumed net cash flow of $84.4 million, according to Morningstar Credit Analytics’ David Putro, but last year’s net cash flow was only $51.2 million.

Occupancy, meanwhile, has fallen from 100 percent in 2022 to 83 percent as of this September. Office tenants include Morgan Stanley, law firm Fried Frank, and the New York State Office of General Services, while Starbucks and Chipotle are on the retail tenant roster.

Putro expects Brookfield to pursue an extension on the loan. For its part, Brookfield appears ready to start 2026 with a breakthrough on the CMBS debt.

“Given the circumstances and the constructive conversations to date, we are very confident that mutually agreeable extension terms can be achieved quickly with the special servicer,” a spokesperson told the Observer.

Brookfield can lean on recent success in this realm. In October alone, the landlord scored a $1.25 billion CMBS loan at 5 Manhattan West and a $1.2 billion CMBS loan at a recently redeveloped office tower at 660 Fifth Avenue.

— Holden Walter-Warner