CMBS Loan on Brookfield’s Towers Headed To Special Servicing

The nearly half-billion-dollar loan tied to two downtown Houston office towers was flagged for special servicing.

New York-based Brookfield Properties is at risk of defaulting on the $470 million commercial mortgage-backed securities loan for One and Three Allen Center, Morningstar Credit reported.

Barclays Capital Real Estate and Citi Real Estate Funding originated the loan used to refinance the property in 2021. It was set to mature in April 2023, but Brookfield secured three one-year extensions, pushing the maturity date to Apr. 9.

One Allen Center, at 500 Dallas Street, is a 34-story, 960,000-square-foot office tower built in 1972. Three Allen Center, at 333 Clay Street, is a 50-story, 1.2 million-square-foot office tower that was built in 1983. Both properties are part of the three-building Allen Center. The complex features 3.2 million square feet of office space, 50,000 square feet of retail and a Curio Collection hotel.

The two buildings backing the loan were valued at $704 million in 2020. They were 80 percent occupied at underwriting and are currently 76 percent occupied, according to data from Morningstar. The data shows the properties’ revenue dropped from $78 million at underwriting to $63.8 million at the end of 2025, while expenses inched down by just $2.1 million.

Brookfield reportedly spent $150 million renovating the massive downtown complex, with the first phase of the renovation wrapping up in 2017 and the second phase completed in 2021. The renovations included updating amenities and green space at the three towers, as well as turning the complex’s DoubleTree hotel into the C. Baldwin.

The loan’s transfer to special servicing comes about a year after Brookfield handed Houston’s largest office complex to its lender. It gave the keys to the 4.6 million-square-foot Houston Center to mezzanine lender and pension fund AustralianSuper, which provided Brookfield a $219 million loan for the purchase in 2017.

Houston’s troubled office market continues to struggle with a mountain of vacant older office space. The market’s vacancy rate remains elevated at 27 percent, according to a recent report from Avison Young.