Fitch Downgrades Brookfield Portion of New York Times Building

The news doesn’t look so good for Brookfield Asset Management, which owns a significant portion of the New York Times Building in Midtown West.

Fitch Ratings downgraded its outlook on Brookfield’s portion of 620 Eighth Avenue to “negative,” Crain’s reported. The shift comes as the asset manager’s debt backing its part of the renowned building is set to come due at the end of the year.

The building’s ownership is divided into two portions. The New York Times owns the lower half of the 52-story, 1.5 million-square-foot building, while Brookfield owns 740,000 square feet from the 29th to the 51st floor.

The Times carries no debt on its space, according to its most recent annual report. Brookfield, however, took out a $635 million mortgage to refinance its part of the building in 2018, provided by Deutsche Bank, Bank of America, Barclays Capital Real Estate Inc. and Citi Real Estate Funding Inc. There’s also a $120 million junior mortgage and $115 million mezzanine loan in place.

Combined, roughly $900 million is set to mature in December.

Fitch specifically expressed concern about the “refinancibility” of the $635 million mortgage. The building generates only 66 percent of the cash needed for Brookfield to service its debt, which the landlord has already extended five times since 2020, according to Fitch; there are no extensions left to be had.

Brookfield declined to comment to Crain’s on the Fitch downgrade.

The investment firm has seen an exodus of tenants in recent years, including law firms Goodwin Proctor, Osler Hoskin & Harcourt and asset manager ClearBridge Investments. In September, law firm Covington & Burling is expected to leave 200,000 square feet behind as it moves to Hudson Yards, leaving an even bigger hole for Brookfield to fill.

Three years ago, tech firm Datadog renewed and expanded at 620 Eighth Avenue. After initially moving into the building on a 31,000-square-foot sublease, the startup today occupies 330,000 square feet.

— Holden Walter-Warner