Brookfield backs Ballast in buying Veritas’ $800M in apartment loans

Pending 75-building portfolio deal would put firms among city’s largest landlords

Brookfield, Ballast Buy Veritas’ $800M in Apartment Loans
Ballast Investments' Greg MacDonald (Ballast Investments, Getty)

Brookfield, the investment firm that refused to pay a nearly $600 million loan tied to its beleaguered San Francisco Centre mall, is buying $800 million in apartments across the city.

The Toronto-based real estate giant has partnered with Ballast Investments to buy $800 million in troubled loans tied to thousands of San Francisco apartments owned by Veritas Investments, the San Francisco Chronicle reported, citing unidentified sources.

Last month, the locally based Ballast agreed to buy the $800 million portfolio of delinquent loans linked to 2,149 San Francisco apartments controlled by Veritas Investments, the city’s largest residential landlord, and its partners.

But it turns out that Brookfield, which manages and owns more than $850 billion of assets, is expected to provide the funding needed to complete the deal, which has not closed. Terms of its agreement with Ballast were not disclosed.

Buying $800 million worth of mortgages would allow Brookfield and Ballast to assume control of 75 apartment buildings once owned by Veritas, making them one of the biggest landlords in the city.

Brookfield hasn’t paid all its bills, however, and the firm faces challenges at its properties in San Francisco and beyond.

In June, the firm’s Brookfield Properties unit and Paris-based Unibail-Rodamco-Westfield said they would stop making payments on a $558 million loan tied to Westfield San Francisco Centre, surrendering the half-empty mall to its lenders.

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During a commercial real estate crash tied to remote work, Brookfield has also defaulted on $1.1 billion in mortgages tied to three office towers in Downtown Los Angeles, according to The Real Deal

It also defaulted on a $161 million mortgage tied to office buildings in Washington, D.C, and as of last month had $763 million in looming defaults.

Last year, Brookfield paused construction on a $3.5 billion mixed-use neighborhood on Pier 70 in Potrero Point because of high construction costs and low demand for offices.

Brookfield’s office tower at 415 Natoma Street, one of the few big buildings completed during the pandemic, is 97 percent vacant, according to the Chronicle.

The company also faces a $180 million loan deadline next month for Stonestown Galleria, among the city’s largest shopping centers, which it says it will refinance.

The decision by Ballast to partner with Brookfield on the Veritas deal appears to sidestep its partnership with The Carlyle Group, a co-investor of San Francisco apartments. This month, Ballast and the Washington, D.C.,-based investor bought a 38-unit apartment complex on Russian Hill for $16.5 million, which followed several other apartment deals in the Marina, on Nob Hill and in Pacific Heights.

— Dana Bartholomew

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(top) Unibail-Rodamco-Westfield's Jean-Marie Tritant; (bottom) Brookfield Properties' Brian Kingston; 865 Market Street (Loopnet, Getty, Unibail-Rodamco-Westfield, Brookfield Properties)
Commercial
San Francisco
Westfield and Brookfield to surrender San Francisco Centre mall
Residential
San Francisco
Ballast Investments wins auction for Veritas’ $800M in apartment loans