Sports Arena redeveloper delinquent on $190 million loan

A unit of the Toronto investment behemoth that bankrolled the demise of San Diego's Midway area height limit in the form of this month's successful Measure E is falling short on mortgage payments to retire a multi-million-dollar debt.

A subsidiary of Brookfield Asset Management is more than 60 days delinquent on a $190 million ln so-called Commercial Mortgage-Backed Securities secured by the White Marsh Mall in Baltimore, Maryland, according to TheRealDeal.com.

Rents have been plunging at the shopping center, the biggest in Baltimore, in the wake of the Coronavirus pandemic and the loss of Sears, an anchor tenant, the report says. Amazon is now using the Sears parking lot for its delivery vehicles.

The loan, set to expire in May of next year, was originated by Wells Fargo in 2013. Brookfield, which hasn't made a payment on the debt since July, has of late been telling investors and lenders not to become concerned about the pandemic's impact on the commercial real estate business.

"The crisis has reinforced a couple of things we already knew," Brookfield Asset Management's Andrea Balkan told CommercialObserver.com last week.

"First, don't panic — things are never as good as they look during a boom or as bad as they look during a downturn. Second, sponsorship is as important as the quality of the real estate." And many reports say Brookfield still has lots of cash.

"The willingness of Brookfield Property Partners LP, Starwood Capital Group, Colony Capital Inc., and Blackstone Group Inc. to skip payments on commercial mortgage-backed securities backed by hotels and malls illustrates how the economic fallout from the coronavirus has devalued some real estate while also creating new targets for these cash-loaded investors," Bloomberg.com reported August 24.

This fall, Brookfield Property Partners partnered with shopping mall giant Simon Property Group in a deal to purchase the ailing assets of bankrupt J.C. Penney for $800 million in a bid to keep Penney's department stores from vacating distressed malls.

Whether Brookfield's potentially lucrative San Diego sports arena deal – for which termed-out Republican Kevin Faulconer engineered the height limit's demise – finds ultimate financial success or requires a bailout remains be seen.

After spending more than $400,000 on the Measure E campaign, Brookfield must now manage to hold on to the putative city franchise awarded it by the lame-duck mayor and ultimately deliver a Covid-proof venue.

Switching business strategies, including bankrolling a forest of condo towers in place of the sports arena, would likely require Brookfield to retain a new corps of city lobbyists to win city backing from the new mayor, Democrat Todd Gloria.