Brookfield Hands Over Keys To Historic Brill Building
Brookfield is walking away from another office building, this time in Midtown Manhattan.
Brookfield has transferred the deed to the Brill Building to lender Mack Real Estate Group in a transfer valued at $216.1M, according to city records first reported by PincusCo.
The historic building was once one of Manhattan's most famous — it hosted the offices and recording studios for some of the biggest musical acts and songwriters of the first half of the 20th century, including the Benny Goodman Orchestra, Bobby Darin, Frankie Valli and the Four Seasons, Burt Bacharach and Carole King.
"Since its construction in 1930-31, the 11-story Brill Building has been synonymous with American music — from the last days of Tin Pan Alley to the emergence of rock and roll," the New York City Landmarks Preservation Commission wrote in 2010.
Brookfield has owned the landmarked building for six years, acquiring it through a UCC foreclosure with the transfer valued at $213.2M. Mack bought the mezzanine debt on the property, at that time $144.9M, from Bank OZK in 2019, PincusCo reported.
Now the building is another casualty of the turmoil facing office properties as interest rates have spiked and office occupancy has stagnated.
Brookfield has defaulted on several properties in the U.S. and turned over several to lenders, including two skyscrapers in Los Angeles and another in Chicago. The Brill Building appears to be the first property in New York City, where Brookfield is one of the biggest owners of commercial space, that the asset management giant has given up on.
A Brookfield spokesperson declined to comment.
Two Downtown LA buildings, on which Brookfield owed more than $750M combined, were placed in receivership in May after the landlord defaulted. In March 2022, the lender on 175 West Jackson Blvd. in Chicago took back the property from Brookfield after it had become delinquent on its loan four months earlier.
Overall, Brookfield’s property division saw the net value of its office portfolio drop by $825M in 2022, due mainly to the impact of rising cap rates.
There are some 15M SF worth of office buildings underwater in New York City, JLL said in June. The two largest office properties to sell in the second quarter of this year in New York, were both short sales, according to Avison Young, meaning the properties went for less than the debt owed on them.
Mack is no stranger to taking over properties on which it holds the debt. It took over seven NYC hotels through foreclosure in 2021. Earlier this year, it was shopping an $85M loan on a development site on the west side of Manhattan, courting buyers who would want to foreclose on and take over the land.
