Brookfield Asset Management still hasn’t figured out what to do about a maturing $260 million commercial mortgage-backed securities loan secured by a struggling South Florida mall. And now the Toronto-based global investment firm is a step closer to facing foreclosure on the debt.
The CMBS loan has been transferred to a special servicer for maturity default, according to a recent Morningstar report. The debt is secured by Pembroke Lakes Mall at 11401 Pines Boulevard in Pembroke Pines. The 3.6 percent fixed-rate, interest-only loan, which Brookfield obtained from GS Mortgage Securities Trust in 2013, matured last month, records show.
“No resolution strategy has been specified,” the Morningstar report states. “The lender is discussing options with the borrower.”
Brookfield, led by Bruce Flatt, owns roughly 535,400 square feet of Pembroke Lakes Mall, which spans more than 1 million square feet. Two big box stores on the 112.8-acre site are separately owned by Dillard’s and JCPenney, respectively.
Completed in 1992, the indoor retail center is struggling, despite a 95 percent occupancy as of September of last year, Morningstar found. Revenue has decreased as expenses have “ticked upwards,” the report states.
In 2023, Morningstar added the Pembroke Lakes Mall loan to a watchlist as a result of declining net cash flow, a jump in the loan-to-value ratio and a skittish lending environment. The same year, credit rating agency KBRA downgraded the bonds backed by the $260 million debt, citing a “continued decline in operating performance.”
Brookfield is not the only South Florida mall landlord dealing with a distressed asset. Last month, a $157.4 million CMBS loan on the 303,000-square-foot central component of Miami International Mall in Doral was placed with a special servicer. Indianapolis-based Simon Property Group, the mall’s owner, failed to repay the debt when it matured in February after obtaining a one-year forbearance.
Last year, Miami International Mall’s market value plummeted by 59 percent during the 10-year period that ended in August, a separate Morningstar report found.