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San Francisco

Brookfield wins 30 days to repay $180M loan for SF’s Stonestown Galleria

Extension gives the investment firm time to negotiate a replacement mortgage for mall

Brookfield wins a 30-day reprieve to pay off $180M loan for SF’s Stonestown Galleria
Brookfield's Bruce Flatt and 3251 20th Avenue, San Francisco (Brookfield, Google Maps)

Brookfield has less than 30 days to dredge up $180 million to avoid defaulting on its Stonestown Galleria mall in San Francisco.

The Toronto-based real estate giant won a 30-day extension on a deadline to repay its mortgage for the 775,000-square-foot indoor mall at 3251 20th Avenue, the San Francisco Chronicle reported.  

The firm told the newspaper it intends to refinance the loans, which matured this month. The 30-day mortgage forbearance has an option for another 30-day extension, according to Morningstar Credit. 

“In our experience, when we are refinancing, it’s not unusual to secure a short-term extension of the loan from the existing lender while we finalize the replacement loan,” a Brookfield spokesperson told the Chronicle.

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. The mall has gone into receivership.

During a commercial real estate crash tied to remote work, Brookfield also defaulted on $1.1 billion in mortgages tied to three office towers in Downtown Los Angeles, according to The Real Deal. Contractors there accuse Brookfield of stiffing them for $6 million in work.

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The company also defaulted on a $161 million mortgage tied to office buildings in Washington, D.C, and by August had $763 million in looming defaults.  A $260 million loan tied to a Brookfield mall in South Florida this month also appeared to be in trouble.

One of the world’s largest alternative investment management companies fell on a watchlist this summer for the Stonestown Galleria ahead of two loans for $180 million set to mature on Oct. 1, according to The Real Deal.

Both loans were funded by Morgan Stanley in 2013 at an interest rate of 4.39 percent. Since then, occupancy has fallen to 66 percent, and cash flow was 16 percent less.

Brookfield has previously said that Stonestown is performing better than San Francisco Centre, with foot traffic higher than in 2019, when Seattle-based Nordstrom pulled out of Stonestown.

Two years ago, the firm filed plans for a $2 billion redevelopment of the 41-acre site in southwest San Francisco, with 2,930 homes and 18 stories of new offices, shops and restaurants atop its parking lot. The 11-acre mall, built in 1952, would be preserved.

Last month, the Canadian firm that owns more than $850 billion of assets partnered with Ballast Investments to buy $800 million in troubled loans tied to 2,149 San Francisco apartments owned by Veritas Investments. The deal has not yet closed, according to the Chronicle.

— Dana Bartholomew

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Brookfield