Brookfield CMBS Has Facebook as Main Tenant in Seattle-Area Deal

(Bloomberg) – A subsidiary of Brookfield Asset Management is preparing a $ 205 million bond that is linked to a loan for two new office buildings in Bellevue, Washington, that Fitch Ratings says are leased to Facebook Inc. .

The buildings, known as Block 16 and Block 24, are part of the development of a community known as the Spring District, a centrally located, traffic-oriented neighborhood in the Seattle area. The loan, granted by Goldman Sachs Group Inc. and Deutsche Bank AG, will secure a commercial mortgage-backed security, Fitch said in a presale report on Tuesday.

Brookfield acquired Block 16 for $ 365 million and Block 24 for $ 200 million in October 2020 and the securitization proceeds will be used to recapitalize the property, fund an advance reserve account, and cover closing costs.

Despite falling demand for office space, lower rents, and uncertainty about how much teleworking will take place after the pandemic, investors this year have been calling for securitized bonds that offer slightly more yield than other asset-backed debt and corporate bonds. In connection with the financing of city office buildings, a number of additional commercial single asset single borrower Pfandbriefe (SASB) were sold this year.

The properties are rented to Facebook until June 2033 and October 2033, i.e. about seven years beyond the term of the loan in September 2026. The leases do not contain any outs.

“Facebook has shown its commitment to the development of the Spring District, acquiring REI’s newly built but unused headquarters … in 2020, and recently signed a lease for Block 5 (no collateral) that will include approximately 345,000 square feet of office space. “Fitch analysts said in the report. “The tenant has two extension options, the first option for seven years and the second option for five years. Facebook has no termination rights in its rental agreements. “

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