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Brookfield DTLA Fund Office Trust Investor, a bellwether for the city's downtown office space, said subsidiaries that owned the 52-story Gas Company Tower at 555 W. 5th St. were in default on roughly $465 million in loans related to the building, according to a filing to the Securities and Exchange Commission. Lenders now may foreclose on the building, but the lenders had yet to exercise any of their options after the default as of Feb. 10.

Meanwhile, Brookfield DTLA defaulted on roughly $318.6 million in loans related to its 52-story 777 Tower at 777 S. Figueroa St., according to the filing. Similar to the Gas Company Tower, lenders have not exercised their options after the default, which includes foreclosure, as of Feb. 10. CoStar Group leases space in the 777 Tower.

The Brookfield DTLA fund, partially owned by Brookfield, owns six Class A office properties and a retail center in downtown Los Angeles totaling roughly 7.6 million square feet.

https://www.costar.com/article/104362755/brookfiel...

Aside from having Brookfield in the name, the publically listed fund (REIT) that owns these DTLA office properties is really on its own and only has a small equity investment from Brookfield. Subsequently Brookfield is making asset management fees off management of the investment vehicle.

Reading the latest quarterly report is not great news for the REIT (ticker DTLA-P). They have very limited cash flow, multiple layers of debt and declining occupancies. It's like the debt holders are working with the fund to restructure the debt.

There are various reasons groups might invest in these properties including union pension funds that have trades that serve these buildings. There are some really good credit tenants in the buildings but they don't make up enough space for it be a "good" business case.

Bottom line, Brookfield the parent company should do fine. In the coming 5-10 years the equity investors here may come out with some kind of return but your money is probably better invested elsewhere.

I'm most surprised that Brookfield allowed a partially owned subsidiary of Brookfield Property to use their name (and in this case drag it through the mud), resulting in headlines like "Brookfield defaults." The financial impact to BN is trivial, and probably the long-term reputational impact is limited, but it's an ugly headline. If I was Bruce Flatt, I wouldn't be very happy with Brian Kingston.

Berkshire has been considerably more careful with its brand (e.g., Berkshire Hathaway HomeServices).

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