Brookfield Gets 30-Day Reprieve On $130M Stonestown Mall Loan
Brookfield was granted a reprieve from its latest loan trouble, receiving a 30-day extension to repay the $180M it owes on San Francisco's Stonestown Galleria. The real estate giant is looking to refinance the loan that was due this month, as first reported by the San Francisco Chronicle.
“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.
The 30-day mortgage extension also comes with an option for an additional 30-day extension, according to data from Morningstar Credit. Brookfield might have an easier time finding a refinance partner than it has in its recent attempts.
“I’d say the environment to refinance is a bit more positive than it’s been — the CMBS market is nowhere near typical volumes, but I have seen some bigger retail properties get financing recently,” David Putro, head of CRE analytics at Morningstar, told Bisnow in an email.
Two large shopping malls in southern California obtained financing recently. Westfield Century City in Los Angeles and Fashion Valley Mall in San Diego received a $925M floating and $450M fixed loan, respectively, according to Morningstar data.
Prospects are more grim for Brookfield’s other large retail asset in San Francisco. Brookfield, along with its partner Westfield, stopped payments on the San Francisco Centre in June. They are expected to lose control of the city’s largest mall after a judge approved a receiver to take control earlier this month.
Foot traffic at Stonestown has surpassed 2019 levels, outperforming San Francisco Centre in terms of traffic, according to Brookfield. Stonestown is located in a more suburban area of the city near Parkmerced and San Francisco State University, compared to the downtown location of Centre.
The closure of some major retailers, including Nordstrom at San Francisco Centre, led to a rise in citywide vacancy, according to a Q3 report by Cushman & Wakefield. The vacancy rate stood at 6.6%, up from 5.4% year-over-year. About 3.4M SF of the 51.2M SF of total retail inventory was available by the end of the third quarter.
Brookfield might want to retain Stonestown in part because of the large projects it has planned surrounding the mall. It plans to build as many as 3,000 apartments and new commercial space in a $2B project, while preserving the existing mall.
In other moves in the city, Brookfield is partnering with Ballast Investments in a planned acquisition of $800M in mortgages tied to a number of San Francisco residential buildings. The deal, which has not yet closed, would allow the companies to take control of 75 buildings with 2,149 units.
