Inside Brookfield’s $190M refi of SF’s Stonestown Galleria

Firm scores CMBS loan with an interest rate nearly double the previous debt

Inside Brookfield’s New $190M Debt on San Francisco Mall
Brookfield Properties’ Brian Kingston and Stonestown Galleria mall at 3251 20th Avenue (Brookfield, Getty; Illustration by The Real Deal)

Brookfield closed on a $190 million deal to refinance its Stonestown Galleria mall in San Francisco, on the heels of handing back the keys on its cross-town Westfield mall and other retail-backed loan defaults across the country. 

A new report from ratings agency Moody’s details the loan: a commercial-mortgage backed securities package with a fixed interest rate and a nine-year term. The San Francisco Chronicle had previously reported Brookfield was nearing a refinancing deal for the property at 3251 20th Avenue, but did not disclose details. 

Deutsche Bank, Wells Fargo and Barclays originated the loan, which has an interest rate of 7.91 percent, nearly double what Brookfield was paying on the mall’s previous debt.

On those CMBS loans, originated in 2013, Brookfield was paying an interest rate of 4.39 percent, according to Morningstar data. 

A Brookfield representative declined to comment. 

Revenues from the Stonestown Galleria shrunk in 2020, after the pandemic hit, but have been slowly increasing since then. In 2021, the mall brought in $13.7 million. A year later, revenues jumped to $20.6 million, according to the Moody’s report.

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Through September, Brookfield reeled in $19.1 million in revenues from the mall. Total sales jumped from $75.6 million in 2020 to $299 million in 2022, the Moody’s report said. 

The property, located just north of San Francisco State University, is anchored by Target, Regal Cinemas, Whole Foods and The Sports Basement — altogether, it’s roughly 83 percent occupied, according to Moody’s.

Moody’s has valued the property at $218 million. 

The new CMBS package is a reprieve for Brookfield’s retail portfolio, as it has struggled with a number of its properties this year. Brookfield has stopped making mortgage payments on the Westfield San Francisco Centre mall, located on the other side of the city from Stonestown. The company also defaulted on a $149 million loan tied to a mall in Charlotte and lost a mall in North New Jersey to foreclosure. 

And only a handful of large CMBS deals backed by single properties have closed over the last year, as rising interest rates have made obtaining financing more difficult. Brookfield is one of the lucky ones to have scored a refinancing deal, though it came as a cost — a higher interest rate. 

“There’s money out there to be had if it’s a great asset, a trophy asset, where people don’t have to worry about a default down the road,” Daniel McNamara, who runs Polpo Capital, which shorts commercial mortgage-backed securities, said on a recent episode of TRD’s podcast.

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